Republicans on Friday evening unveiled the details of a final tax reform compromise, as the drive for approval of a sweeping package of GOP tax reforms gained new momentum, with two key Senators announcing their support for the plan, as party leaders planned final votes in the House and Senate for next week, on the verge of a major political victory.
First, here are the links to the important documents:
No surprise – Democrats don’t like the final deal. House Democratic Leader Nancy Pelosi: “With each version, the GOP tax scam becomes an even more cowardly, outrageous, and brazen theft from middle class families to corporations and the wealthiest one percent.”
Divorce tax law will be a little different, for the person who pays the alimony.
The House Rules Committee will meet on Monday to set the rules for floor debate in the House on the tax reform bill. It looks like the vote will be on Tuesday.
That deal on state and local taxes is not enough for some Republicans who voted against the original plan, as their districts are home to many people paying much more than $10,000 a year in those taxes. Rep. Peter King (R-NY) quickly made clear, he will be voting against the deal.
The final deal on state and local tax deductions will allow taxpayer who itemize to deduct up to a total of $10,000. You can reach that level through any combination of local sales and/or income taxes, and property taxes.
On home mortgage interest, the final plan allows taxpayers to deduct that interest on a mortgage up to $750,000, down from $1 million under current law. All existing mortgages would be grandfathered. The plan also ends a write off for interest on a home equity loan.
The Senate won the fight on the standard deduction, which will be increased to $12,000 for a single taxpayer, $18,000 for a head of household, and $24,000 for a married couple filing jointly. It would then be indexed to the “chained-CPI-U,” which means it would then grow at a level that’s less than inflation.
Here is the tax bracket graphic for married couples. Note the highest tax bracket. Instead of simply doubling the amount of money in the top bracket for a single, which is $500,000, the plan has the highest rate for a couple who makes $600,000 a year. Current law sets that highest rate at around $418,000 and $470,000.
For many people, the first question to answer is what income tax rate will they pay under the new system. This is the graphic for single taxpayers.
Speaking to reporters, Rep. Kevin Brady (R-TX), the Chairman of the House Ways and Means Committee won’t say exactly when the final vote will be in the House, but he’s confident of victory. “Lots of momentum.”
The first thing to note is on the very first page, talking about individual income tax rates. The lower rates are not permanent. They would expire at the end of 2025 – so they last for eight of the ten years in this bill.
Earlier today – Votes fell into line in the Senate. “This bill is far from perfect,” said Sen. Bob Corker (R-TN), who voted against the original Senate plan. “But after great thought and consideration, I believe that this once-in-a-generation opportunity…is one we should not miss.”
Corker’s announcement came soon after Sen. Marco Rubio (R-FL) signaled his support, after a late change to the bill’s details on a child tax credit provision, all but insuring that the plan would make it through the Senate.