DawgTalkers.net Forums DawgTalk Palus Politicus House GOP tax overhaul keeps retirement rules

GOP just released the tax plan. Thoughts?

https://finance.yahoo.com/news/house-gop...3--finance.html

WASHINGTON (AP) — House Republicans would preserve the popular retirement account for middle-class Americans while limiting a cherished deduction for homeowners in a sweeping tax cut plan unveiled Thursday that would add $1.5 trillion to the nation's debt.

GOP leaders briefed rank-and-file lawmakers on the proposal Thursday morning ahead of a formal rollout and a show of unity event at the White House with President Donald Trump. A major revamp of the tax code, the first in three decades, is a top legislative and political priority of Republicans.

Details were contained in a summary obtained by The Associated Press.

The proposal would leave intact the existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-free. But the plan limits the widely used deduction for mortgage interest for new home loans of $500,000 or less, a sharp reduction from the current $1 million cap.

The plan also limits the deductibility of local property taxes to $10,000 while eliminating the deduction for state income taxes, which generated significant opposition from Republicans in high-tax states such as New York and New Jersey.

"I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers," said Rep. Lee Zeldin, R-N.Y., who represents eastern Long Island. "I don't want my home state to be a loser, and that really shouldn't come as any surprise."

The child tax credit would be increased from $1,000 to $1,600, though the $4,050 per child exemption would be repealed.

The legislation is a longstanding goal for Capitol Hill Republicans who see a once-in-a-generation opportunity to clean up an inefficient, loophole-cluttered tax code. But there is lingering opposition from northeastern Republicans fearful of losing a cherished deduction for state and local taxes and anxiety among other rank-and-file lawmakers over emerging details.

Influential conservative Rep. Mark Meadows, R-N.C., dismissed proposed retirement changes as a "non-starter," adding "that's what most of middle-income America uses as their nest egg."

The plan shrinks the number of tax brackets from seven to three or four, with respective tax rates of 12 percent, 25 percent, 35 percent and a category still to be determined. The tax system would be simplified, and most people would be able to file their returns on a postcard-sized form.

The plan sets a 25 percent tax rate starting at $90,000 for married couples, with a 35 percent rate beginning to bite at $260,000 — which means many upper-income families whose top rate is 33 percent would face higher taxes. Individuals making $500,000 and couples earning $1 million would face the current Clinton-era top rate of 39.6 percent.

The plan calls for nearly doubling the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families, and increasing the per-child tax credit. On net, it could mean tax increases for many upper middle-income families.

The plan slashes the corporate tax rate from 35 percent to 20 percent, a demand of Trump. It also repeals the inheritance taxes on multimillion-dollar estates, a big break for the wealthy.

Republicans and Trump argue that sharply cutting tax rates for businesses improves U.S. economic competitiveness, but the possibility of letting the lower corporate rates expire is rankling some longtime advocates who say the uncertainty could limit its boost to the economy.

The ambitious timetable calls for passing the complex measure in the House by Thanksgiving.

"Failure is not an option," said Rep. Chris Collins, R-N.Y.

The emerging plan would retain the Clinton-era 39.6 percent income tax rate for the wealthiest earners. But for that highest bracket, the tax writers were considering raising the minimum level of income to $1 million for couples or families from the current $470,000 — a change that would reduce tax revenue.

Meadows, the chairman of the House Freedom Caucus, said he was worried about eligibility limits that could prevent some businesses from taking advantage of a lower 25 percent tax rate.

"How as a Republican can we pick winners and losers that way? I mean it makes absolutely, certifiably no sense," Meadows said.

Trump set an aggressive timetable for the legislation and predicted a grand signing ceremony before Christmas at "the biggest tax event in the history of our country."

Democrats have repeatedly complained the plan was too favorable to business and the wealthy, and contradicted Trump's rhetoric of bringing tax relief and economic benefit to the stressed middle class.

So they are still saying I will lose some deductions and have my taxes raised from 10 percent to 12 percent.

hey man, at least the wealthy can get their yacht quicker. that's whats most important, after all.

This Bill is good, not Perfect

But

We must never let Perfect get in the way of Good.

there's never a such thing as a perfect bill.

but i have my doubts that this bill is even good.

Hard to say. I don't like the fact limiting mortgage interest rate, but if i am doubling my initial deduction, i am still ahead. personally on that aspect, it works for me. I do see it as a downfall for incentive to buy a home.

i don't like reducing the child deduction and adding to the credit. that gives more incentive to not work and pop out more kids imo.

i think the bracket for 25% should be a little higher income wise.

I don't see this going through as is.

I see all the big shots selling this a middle class friendly Bill... I think the middle class will be shafted! Disgusting. I think we'll know about the fine print after the experts get to read the fine print.

There is a whole lot to digest in there and, in the end, I'm not sure what exactly it would mean for me...


It says that and then rambles on about a 39.5% bracket, so I'm not sure how that works.. is the 39.5% bracket determined as the fourth or not?

Then it says:


I'd have to look at the numbers to see how that offsets.. If I'm reading it right, it seems to be a big win for couples without kids.. is that right?


This will be a huge windfall for corporations and it may be good for long term growth but in the short term it's going to rapidly escalate the debt.... it has to.

I guess I will have to wait for other sources to dig into the details and break it down.. try to get a variety of opinions and see where I end up... I certainly don't have the time or the expertise to run and re-run my taxes through a bunch of different scenarios to figure it out.

Full text isn't out yet. Ways and Means only released a summary of the text. Kevin Brady said it'd increase the debt by $1.5 trillion

yea i don't see it either bro.

Trump will make out like a bandit. Isn't that all that matters.

here's a very detailed article on the plan:

HERE IT IS: The giant Republican tax-reform bill

http://www.businessinsider.com/trump-gop...medium=referral

House GOP leaders on Thursday took their biggest step yet in their attempt to overhaul the US tax code by releasing legislation that proposes sweeping changes to the current system.

The 429-page "Tax Cuts and Jobs Act" includes a broad set of proposed changes to the corporate and individual tax system, building off a nine-page framework that the White House and congressional Republican leaders dropped in September.

"My administration will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms — the rocket fuel our economy needs to soar higher than ever before," said US President Donald Trump, who has expressed a desire to sign a bill into law by Christmas.

House Ways and Means Committee Chair Kevin Brady, the author of the tax bill, said the House should pass the plan by Thanksgiving.

Significantly, Brady said the bill would add $1.51 trillion to the federal deficit over the next 10 years. The Senate is set to use the process known as budget reconciliation to move the bill and avoid a Democratic filibuster. Among other rules, the reconciliation framework in the recently passed budget resolution allows for the bill to add $1.5 trillion to the deficit over 10 years.

Brady, House Speaker Paul Ryan, and other House GOP leaders touted the bill in a press conference on Thursday and argued it would save the average family of four $1,182 a year on their taxes.

But different groups would benefit in different ways from the plan. How the gains would be distributed among different income groups and localities was not yet clear.

The details
Here are some of the legislation's key proposals:

The highest tax bracket would remain at 39.6%: According to reports, the plan would propose a fourth marginal tax bracket on high-income earners. It will reportedly apply to married couples making more than $1 million a year.
New individual tax brackets:
12%: Applies to incomes up to $45,000 for an individual and $90,000 for a married couple.
25%: Applies to incomes up to $200,000 for and individual and $260,000 for couples.
35%: Applies to incomes up to $500,000 for an individual and $1 million for couples.

A change to the state and local tax deduction. One of the biggest hangups for Republicans in states like New York, New Jersey, and California has been the proposed elimination of the state and local tax (SALT) deduction. The benefit allows people to deduct those taxes from their federal bill. Brady said Tuesday the GOP reached a deal that would allow people to deduct state and local property taxes up to $10,000 but not income or sales taxes.
Corporate tax cut will be immediate and permanent. The cut to 20% from the current 35% will is designed to be permanent.
Elimination of the estate tax. The threshold for the tax, which applies only to estates with greater than $5.6 million in assets during 2018, would double to over $10 million. Then, the plan would phase out the tax after six years. The Senate GOP appears to be mulling preserving at least part of the tax.
Repatriation tax rate. The repatriation rate on overseas assets for US companies would be as high as 12%. The bill also may include a mandatory repatriation of all foreign assets. Illiquid assets would be taxed at a lower rate, spread out over a longer period than liquid assets like cash.
No repeal of Obamacare's individual mandate. Despite Trump's last-minute push to eliminate the penalty for not having insurance, such a provision was not included in the plan.
No changes to 401(k) plans. Despite a back-and-forth between House tax writers and the White House that appeared to suggest some change to retirement-savings accounts would be included in the tax bill, there were no changes proposed in the first iteration.
Increase in the size of the child tax credit. A pet project of Ivanka Trump, the proposal is to increase the credit to $1,600 from $1,000. The bill would also add a credit of $300 for each non-child dependent or parent for five years, after which that provision would expire.
Limiting home-mortgage-interest deduction. On new-home purchases, interest on loans up to $500,000 would be deductible. The current limit is $1 million.
A larger standard deduction. To avoid raising taxes on those currently in the 10% tax bracket, the standard deduction for all taxes would increase to $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700). These are slightly less than the doubled deductions expected — and, as Business Insider's Josh Barro has written, the idea that this would save people money may be misleading since it eliminates other personal deductions and a secondary standard deduction.
A 25% rate for pass-through businesses. Instead of getting taxed at an individual rate for business profits, people who own their own business would pay at the so-called pass-through rate. There will be some guardrails on what kinds of businesses can claim this rate, to avoid individuals abusing the lower tax.
Elimination of most personal itemized deductions and many credits. The only deduction preserved explicitly in the plan is for charitable gifts and and edited home-mortgage interest. Some of these include:
Elimination of the student-loan-interest deduction: The amount paid toward student loan interest can currently be deducted.
Elimination of the medical-expense deduction: Under current law, individuals who spend over 10% of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction.
Elimination of the moving deduction: This allows anyone who moved to a new home in the past year to deduct moving expenses.
Elimination of alimony-payment deduction.
Repeal of the alternative minimum tax (AMT). The tax, which forces people who qualify because of an outsized number of deductions, would be eliminated under the legislation. Incidentally, Trump's own tax bill has been shown to be millions of dollars more because of the tax.
Create a tax on large private university endowments. Private universities with assets of more than $100,000 per student will pay a 1.4% excise tax on their net investment income.
Repeal the Johnson Amendment. The current rule prevents tax-exempt nonprofits from making explicit election endorsements.
Eliminate the ability to deduct interest on bonds for sports stadiums from federal taxes. Currently, local governments issue bonds to pay for the construction of sports facilities, this would prevent people from deducting interest income form those bonds on their federal taxes.
Mixed reaction
As details of the bill began to trickle out, reactions poured in. The changes to the mortgage-interest deduction and other provisions sent stocks of homebuilders sliding. The SPDR S&P Homebuilders ETF was down roughly 2.5% Thursday morning and shares of major builders D.R. Horton, Pulte Group, and Lennar all slipped.

On the other side, Business Insider's Joe Ciolli reported that companies with a higher effective tax rate and those with a lot of money held overseas rallied strongly on the release of the bill in anticipation of possible higher profits.

Outside of the markets, politicians and advocacy groups immediately rushed to react to the bill.

The National Association of Realtors told Business Insider's Akin Oyedele that the bill would not benefit homeowners.

"We are currently reviewing the details of the tax proposal released today, but at first glance it appears to confirm many of our biggest concerns about the Unified Framework," said NAR President William Brown in a statement. "Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that. We will have additional details upon a more thorough reading of the bill."

The National Association of Homebuilders also took a shot at the bill.

"The details that are coming out show that the House Republicans are picking large corporations and wealthy Americans over small businesses and middle-class American homeowners," Jerry Howard, the NAHB's CEO, said.

Republican Sen. Marco Rubio criticized the size of the increase for the child tax credit on Twitter, saying it did not go far enough.

"House #TaxReform plan is only starting point. But $600 #ChildTaxCredit increase doesn’t achieve our & @POTUS goal of helping working families," Rubio said.

And there it is.. roughly a 10% middle class tax increase for those couples who make over 90k. I hope those middle class couples who make 95k annually will be able to afford to pay the same tax rate as those couples who make 240k annually. Enjoy!

Yeah, I'm screwed. We already make too much to receive the child tax credit anyhow. I guess my wife should just quit.

Why the F would they not leave the inheritance tax in place.

This just screams money in politics.

Help me out: What is the current tax rate for couples that make $90,000?

I would ask the question: Why, when you die, does the gov't. get to take ANY cut of your wealth, that you've already paid taxes on?

I know, it's only for "rich" people.

I'd be curious to hear what your take would be if the "inheritance" tax applied to everyone. Would you be for it, or against it?

Under the House bill, The Tax Cuts and Jobs Act, there will be four: 12 percent, 25 percent, 35 percent and 39.6 percent, according to The Wall Street Journal. The bill roughly doubles the standard deduction to $12,000 for single filers and $24,000 for married couples.

-The 12 percent bracket: This rate applies to single filers starting at $12,000 up to $45,000. For married joint filers, this applies after the $24,000 deduction up to $90,000.
-The 25 percent rate: This begins at $45,000 for single filers and $90,000 for joint filers who are married.
-The 35 percent rate: Single filers reach this bracket at $200,000. This rate applies to married filers at $260,000.
-The 39.6 percent rate: This rate applies at $500,000 for singles and $1 million for married couples.

https://www.cnbc.com/2017/11/02/here-are-the-new-tax-brackets-in-the-gop-plan.html

agree, amounts or figures have nothing to do with the principle that the money was already taxed. it should not be taxed again.

Thanks.

But, I meant right now.

What is the tax rate for couples earning up to $90,000 now, or last year, or the year before?

We were paying in the range of 12-15% when making around 90k

I'm sorry but I would have to charge you for that info.

been doing some math, and compared my personal taxes from last year to what ***it may*** look like what I would have paid on this plan.

I would pay 1989.96 less in taxes, and I would get an additional 600 in refund for the child tax credit. to me that's 2589.96 in my pocket or 215.83 a month.

For me, the increase in deduction is my saving grace, which will put me in the lower bracket, which is less than what I am in now.

***this is depending though if I can still deduct daycare expenses or not. I pay about 10K a year in daycare, which last year I can deduct, I did not see if I can deduct that or not on this plan, so I kept them deduction.

limiting the mortgage interest deduction sucks, but honestly I have such a low mortgage rate that it really doesn't effect my deductions much. I saved 145 dollars according to my return last year on int deduction on that. ill take the double standard deduction any day of the week over that.

my return last year had me at 15% making less.

do not forget that a LOT OF PEOPLE are going to fall UNDER the 90K bracket due to the double deduction, I don't think people are considering how much that is going to help people.

25% for filers making over 45kSingle-90kMarried is ludicrous when it's only a 10% increase for those filers who's annual income is more than double that.

Could you explain in your own words - without stealing the labor of someone else and passing it off as yours - what is good about a bill that screws over the working class immensely?

My deductions are already more than double the std. This is a huge tax increase on the middle class, plain and simple. And a huge tax cut for the rich....once again. Murica

Well technically, you would need to make 57,000 for that because of the standard deduction being 12K under this plan.

Each person is different, and there is a lot this doesn't go over, like the child care deduction - is that staying or going? makes a huge difference for me, personally.

and obviously the numbers I figured are estimates which was the ***** I put to point that out. If I use last years numbers compared to this one, I pay tax on 4500 less income as well as a lower tax rate.

I am not endorsing this plan yet, as I have more research to do. But off hand it looks like I will benefit. You may not. I may not in the end. I was just pointing out what the VERY LIMITED information on the plan is showing me.

I think people forget that every persons instances are different. If you don't have a 401K and invest your money in say real estate - I would be ****** off right now. On the opposite side, if you are close to the lower bracket and are now getting an additional 6K deduction with a lower tax rate....you might have reason to be ecstatic.

Technically the middle class is screwed. Stop sugar coating a bad tax bill.

Hey Arch, I think my first response would be that it's not their money anymore.

To answer your question, I believe in being fair across the board. A flat percentage would be fair to me, too, regardless of income. The problem becomes that you're going to have a lot of $0 estates and a lot of high-dollar estates that exploit every loophole known to mankind to make their estate look to be $0, leaving the middle once again in the "screwed" position, but that's much like everything else in politics right now.

Then the issue is the loopholes, not the taxing of them. Close those loopholes and their is no issue.

I agree with that...unfortunately nobody in Congress does.

It's all messed up, I know.

It doesn't cost a whole lot to put things in a trust, to get a financial advisor and attorney that can protect your assets if/when you die.

I would love if they'd simplify things. First, it's not the gov't.s money to begin with.

But, if it's "good" for the person that has $10 million, it's good for the person that has $10. Not?

If your estate is 0, then you pay 0.

And, you could get rid of the estate planning aspect of it if it was just simplified. Say, 10%. Boom.

Gov't. won't go for it, cause it would "cost" them. Attorneys wouldn't go for it, cause it would "cost" them.

And I agree with that.

Link

Under the current tax law, the median income of the US falls in the 25% bracket. Under the new plan, they fall into the 12% bracket. Seems like a lot of people will pay less taxes.

NPR

According to this, roughly 50% of americans will fall in the lower tax bracket unless I am reading it wrong.

Well this data was taken more than five years ago during a great recession. So there is that.

Middle class Americans households make up to around 200k. There needs to be a tax break for households that are making less than 200k not an increase. The middle class is getting soaked again in this tax plan.

Between 2015 and 2016, US median household income rose 3.2% from $57,230 to $59,039,

Link

So if you earn $85,000 a year, your tax rate’s 12%. But you still get your standard deduction, the child tax credits and stuff. On the first $90,000 you earn, the tax rate’s 12%. The next tax bracket is 25%. And that is up to $260,000 a year. So if you make $250,000, you’ll be taxed at 12% on the first $90,000 and then 25% on the remaining amount getting you to 260.

You are cherry picking numbers to fit your agenda. The MAJORITY of americans make nowhere near 200K. So the MAJORITY of americans will benefit.

People also need to remember, that is based on your TAXABLE income.. yea, you might make $110K.. but after your 401K deposits, deductions for kids, mortgage, etc.. you taxable income could easily be below $90K..

That's precisely what you're doing.

The very article you cited points this out. You're looking at gains and ignoring losses.

Let's take some guy making $57K at a factory in Indiana. This administration and Congress are absolutely boning this guy. They're ripping away his health care, stripping his bargaining power, and probably costing him his job in the long run.

But in the focus of the short run - health care, wages, opportunity - the policies of Trump and Ryan are going to exponentially increase his cost of living, in a hurry.

The pittance he gets in a tax break is a huge net loss.