‘Pro-Growth, Pro-Family’: Inside House GOP tax bill
The ‘Tax Cuts and Jobs Act’ policy brief, released by the GOP leadership of the House of Representatives on Thursday, keeps the top rate of tax at 39.6 percent for the highest earners, and almost doubles the standard deduction for middle class families.
“This plan is for the middle class families in this country who deserve a break,” said House Speaker Paul Ryan (R-Wisconsin) speaking on Capitol Hill on Thursday, surrounded by families. “It is for the families out there who are living paycheck to paycheck who just keep getting squeezed.”
Paul Ryan on GOP tax bill: "This plan is for the middle-class families in this country who deserve a break." pic.twitter.com/T8RzRF8cKq— Washington Examiner (@dcexaminer) November 2, 2017
The plan would save the average family of four $1,182.00 a year on their taxes, Ryan said. It is the first revamp of the US tax code since 1986.
The proposal “lowers individual tax rates for low- and middle-income Americans to zero, 12%, 25% and 35%, so people can keep more of the money they earn through their lives, and continue to maintain 39.6% for high-income Americans,” said the published brief.
Under the plan those individual earners with an income over $500,000 – compared with the current figure of $418,000 – will be taxed at 39.6 percent.
Under the new brackets of 12 percent, 25 percent, and 35 percent, people earning up to $200,000 will fall under the tax break of 25 percent. For the average family of four earning $60,000, their tax will be from $1608 to just $472.
“It is the beginning of the end of this horrible tax code,” Chairman of the House Ways and Means Committee Kevin Brady (R-Texas) said Thursday.
Standard deductions would grow from $6,350 to $12,000 for individual filers, while deductions for married couples would increase from $12,000 to $24,000.
If approved, the proposal would expand the child tax credit to $1,600 from $1,000, and would not make any changes to the 401(K) plans.
The bill would keep the mortgage-interest deduction but only for newly-purchased homes up to $500,000 in value. That is a departure from the current cap of $1 million for couples filing jointly. Existing mortgage holders could keep the deduction regardless of price.
The legislation would also let taxpayers deduct their state and local property taxes but only up to $10,000. It would not allow people to deduct income or sales taxes, whether state or local. Blue-state Republicans, particularly in New York, have fought to preserve the deduction, which is important to their constituents.
“I’m still analyzing it, but right now, I’m strongly leaning no,” Rep. Pete King (R-New York) told The Hill.
The corporate rate would be lowered from 35 percent to 20 percent. The bill would also lower the top rate for non-corporate “pass through” businesses from 39.5 percent to 25 percent.
The proposal also envisions a one-time tax of 12 percent on multinational companies’ accumulated offshore earnings held in cash, and five percent for non-cash. They would have several years to make those payments, according to Bloomberg.
Previously, when companies were taxed at 35 percent on their overseas earnings, they used loopholes to defer tax payments, and stockpiled an estimated $2.6 trillion offshore. US President Donald Trump has said repeatedly he believes the amount is far higher.
The plan is not final and will lead to weeks of legislative and lobby fighting to meet President Trump’s goal to sign the legislation before Christmas.
The 2018 budget resolution approved by the House and Senate allows for tax legislation that would increase the federal deficit by $1.5 trillion over 10 years. Figuring out how to make the deep cuts that Trump wants will be complicated.
The House Ways and Means Committee will start considering the bill on Monday, with House Republican leaders hoping to pass the measure by Thanksgiving.