Some senators are like the Oakland Raiders whose offensive line lets their Quarterback get sacked. The Senate has made changes that probably aren’t going to fly.
If the bills aren’t reconciled, Republicans can kiss their majority goodbye, not that the alternative will improve anything. Democrats won’t have to recruit women to say some Republican was molesting them, the Republicans will do themselves in.
The Senate tax plan differs from the plan making its way through the House on some key issues. It could sabotage the reform.
The corporate tax rate reduction to 20% will not take place until 2019 in the Senate plan whereas the House and the President want it to take place in 2018. It saves $100 billion which is almost meaningless in a multi-trillion dollar budget.
The Senate plan fully eliminates the deductions for state and local taxes whereas the House does not. It is a key sticking point. The Senate keeps the mortgage interest deduction and ups it to $1 million instead of the $500,000 in the House bill. Businesses on the other hand will keep this deduction.
The Senate added tax brackets and we’re up to seven.
The child tax credit operates less as welfare for people not earning money and expands to include more people in the upper middle class brackets.
The Senate plan does NOT repeal the Affordable Care Act’s individual mandate. That is a problem for many of the electorate though Democrats now run on the failing Obamacare, claiming Republicans are simply not fixing a great bill.
The Senate lowers passthrough taxes for businesses.
Both bills eliminate the Alternative Minimum Tax and over the corporate rate to 20%. The tax rate for the wealthy is ridiculously high.
Tax brackets were added by the House but the Senate bill adds to them: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
10% (income up to $9,525 for individuals; $19,050 for married couples filing jointly)
12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
22.5% (over $38,700 to $60,000; over $77,400 to $120,000 for couples)
25% (over $60,000 to $170,000; over $120,000 to $290,000 for couples)
32.5% (over $170,000 to $200,000; over $290,000 to $390,000 for couples)
35% (over $200,000 to $500,000; over $390,000 to $1 million for couples)
38.5% (over $500,000; over $1 million for couples)
The House bill, only calls for four brackets: 12%, 25%, 35% and 39.6%.
The standard deduction for singles goes up to $12,000 from $6,350 currently; and it raises it for married couples filing jointly to $24,000 from $12,700. More people will not have to itemize deductions.
Personal exemptions are eliminated. People who have three or more kids might not get tax relief.
It fully repeals state and local tax deductions. Individuals won’t be able to deduct their property, state, local taxes. High tax states will be hit hard.
That was a major sticking point in the House which is why they added the codicil that state and local taxes up to $10,000 could be deducted. They did it to get the bill moving through the House.
However, business owners and partners who pay tax on their company’s profits through their individual returns would still get to deduct their state and local taxes as a business expense.
The Senate GOP bill increases the child tax credit to $1,650 per child, up from $1,000 today, and slightly above the $1,600 proposed in the House bill and raises the age of the child to 18.
Child tax credits have been welfare for those who don’t pay taxes — they would get taxes returned even if they didn’t pay any. That changes a bit in that the $650 increase won’t be available to the lowest income families if they don’t end up owing federal income taxes. That’s because unlike the first $1,000, the extra $650 wouldn’t be refundable. When a credit is refundable, it means you still can get money from the government because of the credit, even when your federal income tax bill is zero.
It expands who is eligible for the tax credit on the other end: To $500,000 for single parents, up from $75,000 today; and to $1 million from $110,000 for married couples.
Filers with dependents who are not qualified children may be able to claim a new $500 nonrefundable credit per dependent.
The mortgage interest deduction remains but increases to $1 million whereas the House bill stopped at $500,000.
It repeals the Alternate Minimum Tax. That was long overdue and in no way meets its original purpose. It was meant to only hit the wealthiest Americans, the top 1% when people made far less, but now affects the upper middle class and households with two incomes for decades.
The corporate tax rate will go from 35% to 20% but it won’t take effect until 2019. The House had it taking effect next year. The Senate will slow one of the most positive changes in the tax bill to reduce the costs of the plan by $100 billion and keep it within the 1.5 billion dollar increase threshold set in the budget.
Businesses can immediately and fully expense new equipment, for at least five years.
Most U.S. businesses are set up as passthroughs, not corporations. That means their profits are passed through to the owners, shareholders and partners, who pay tax on them on their personal returns under ordinary income tax rates.
The Senate bill would lower passthrough taxes by letting those in partnerships, S corps or sole proprietorships deduct 17.4% of their income. And it would disallow the 17.4% deduction for anyone in a service business except those whose taxable incomes don’t exceed $150,000 if married ($75,000 if single). It’s more favorable to business than the House bill.
Businesses who operate overseas don’t pay U.S. taxes unless they bring the money home which encourages businesses to keep their money overseas and pay worldwide taxes. The Senate proposes a U.S. territorial tax system.
It requires companies to pay a one-time low tax rate on their existing overseas profits — 10% on cash assets and 5% on non-cash assets (e.g., equipment abroad in which profits were invested).
Marlin Steel Wire Products President Drew Greenblatt says production will surge in factories. Prices will go down, jobs will grow and more people will be hired in the USA. Listen to the video below. It will allow US companies to compete throughout the world. Greenblatt said it’s a big win for The average American will be able to fill out their taxes on a postcard, he said.