Dear Commons Community,
The Republican-controlled US Senate and House of Representatives yesterday released the final version of their revised tax proposal. The new bill features several changes from the original House and Senate versions. They are planning to vote on it as early as next week. The final proposal does NOT call for a tax on students who receive tuition waivers from their schools. It does keep a 1.4 percent excise tax on investment income at private colleges with an enrollment of at least 500 students and with assets valued at $500,000 per full-time student. Below is an analysis of other elements of the revised bill courtesy of Business Insider.
The Democrats, major unions, and community groups have opposed the Republican proposal because it greatly favors corporations and high earners (the one percenters). On Tuesday, December 19, at noon, there will be protests on Wall Street and other places around the country to stop passage of the Republican proposal.
December 15, 2017
Republicans released the final version of their massive tax bill on Friday, setting up a frantic stretch to pass the plan through Congress next week.
The bill is a compromise between the House and Senate versions and assembled by Republican members mostly from the committees that wrote them.
- It would give corporations a slightly less generous tax cut. The corporate rate would be slashed to 21% from the current 35%. The House and Senate versions had proposed 20%.
- It would increase the refundability of the child tax credit. The bill would increase the child tax credit to $2,000 from the current $1,000, like the Senate version — but the level to which the credit would be refundable would increase to $1,400 from the Senate’s proposed $1,100. That change is aimed at Sen. Marco Rubio, who on Thursday threatened to vote against the bill if the credit were not made more generous.
- It would lower the top marginal tax rate. It would be 37% instead of the current 39.6%. That’s more generous than the 38% proposed in the Senate version.
- It would adjust the individual tax brackets.
- 10%: $0 to $9,525 of taxable income for an individual; $0 to $19,050 for married joint filers
- 12%: $9,526 to $38,700 individual; $19,051 to $77,400 joint
- 22%: $38,701 to $82,500 individual; $77,401 to $165,000 joint
- 24%: $82,501 to $157,500 individual; $165,001 to $315,000 joint
- 32%: $157,501 to $200,000 individual; $315,001 to $400,000 joint
- 35%: $200,001 to $500,000 individual; $400,001 to $600,000 joint
- 37%: over $500,000 individual; over $600,000 joint6 PHOTOS
- It would allow people to count income or sales tax toward the state and local tax deduction. The House and Senate versions proposed people be able to deduct up to $10,000 in state property taxes from their federal tax bill. The compromise bill would allow people to deduct up to $10,000 in a combination of state and local property, income, and sales tax. It’s unclear whether that figure is the same for joint and individual filers.
- It would give pass-through businesses a deduction. Pass-through businesses like limited liability corporations in which the owner books the profits as income would be allowed to deduct 20% of their earnings — like the Senate version, but down from its proposed 23% deduction. The benefit would also phase out starting at $315,000 for couples, down from $500,000 in the Senate version.
- It would double the threshold to qualify for the estate tax. It’s currently $5.6 million. But the increase would expire, along with all the individual tax changes, in 2026. Many Republicans wanted to do away with the tax entirely.
- It would not repeal the Johnson amendment. That prevents nonprofit organizations from donating directly to political campaigns, and the House and Senate versions called for repealing it. Critics had argued that would allow nonprofits to become de facto tax-exempt political organizations.
- It would lower the threshold for the medical expense deduction for two years. The House version called for repealing the deduction, which allows people with medical expenses above 10% of their income to deduct costs beyond that. The compromise bill lowers that level to 7.5%. Sen. Susan Collins requested this change.
Republican leaders have said they plan to hold a vote on the compromise bill early next week, with a goal of President Donald Trump signing it by Wednesday.
Despite concerns from some senators, it appears Republican leadership has secured enough votes to pass the bill.