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Congressional Republican's Proposed Tax Plan

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    Congressional Republicans released their long awaited blueprint for an overhaul of the tax system and, not surprisingly, there are some winners and losers. While it's still very early in the process, the plan as written would be the first major rewrite of the tax code since the early days of the Bush Administration.

    The proposal suggests narrowing down the tax brackets into three categories, four less than the current seven brackets. The poorest Americans would see an increase from 10% to 12% while the wealthiest Americans would see a decrease from 39.6% to 35%. The plan currently doesn't stipulate what the income limits are for each of the three proposed brackets of 12%, 25%, and 35%.

    The business tax rate would drop dramatically from 35% to 20% while also getting rid of many deductions business take advantage of.

    Other things in the initial blueprint foresee a larger standard deduction for individuals while getting rid of many popular deductions at the same time. It would also repeal the Alternative Minimum Tax (AMT) and the Estate Tax - two taxes that the only the wealthiest Americans pay.

    Republicans have not explained how they intend to pay for the proposal, which would certainly add billions of dollars to both the debt and deficit, which will be a test to see if Republicans truly care about those two or if they simply used them as talking points during the Obama era.

    As I said earlier, we're still in the very beginning stages of negotiations, but this plan or one similar to it stands a very good chance of passing the Republican Congress.

    Is anyone paying attention to the negotiations? If so, what do you think of the proposal as it's currently written?

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    Definitely still a work in progress it seems. I am interested though to see how this all shakes out. Some of the plan I am actually very FOR, but curious if it's actually possible. Here's a USA Today exert to consider, on current proposed changes to the tax brackets and standard deductions:

    The seven individual income tax brackets in place now, which range from 10% to 39.6%, would be replaced by 12%, 25% and 35%.

    The proposed bottom rate of 12% is higher than the 10% the White House said it was seeking in a one-page list of goals for tax reform released in April. But people paying 10% now may not owe any tax under the new plan.

    "We flatten out the tax code, lowering the rates at every level so people can keep more of what they earn," said Rep Kevin Brady, R-Texas, chairman of the House Ways and Means Committee. "That means the 15% rate today will be lowered to 12. The 10% rate today will go to zero. The tax elevator goes down at every level."

    The plan would nearly double the standard deduction, the amount that's subtracted from incomes before the tax rate is applied. The deduction would grow from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.

    Some of that increase, however, would be offset by the elimination of personal exemptions for a taxpayer and spouse. In 2017, those exemptions were worth $4,050, meaning a taxpayer and spouse could reduce their income by $8,100 before calculating how much tax was owed.

    So I am actually for simplifying the tax code in favor of more uniform standard deductions vs several niche ones that not everyone qualifies for, like being married or owning a house, having several dependents, etc. I don't believe that those paying 10% will owe nothing though. That doesn't seem plausible, especially if you make all the other cuts to the higher brackets and business tax %s as well. Would be very nice for low income families though.

    I have hoped and wondered for a long time if a more simplified tax code was even possible, as complicated as we have made it over the decades. While this is still a work in progress, honestly, I'm kind of rooting for it to maintain the spirit of simplicity it currently holds, and to make it through. One of the few Trump moves I am intrigued by.

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    J.K.Logic Wrote:

    So I am actually for simplifying the tax code in favor of more uniform standard deductions vs several niche ones that not everyone qualifies for, like being married or owning a house, having several dependents, etc.

    I agree. At the same time, it does benefit the government for having several niche deductions. This way, I think it makes the water murky. Many people do not know what they qualify for, the information is out there, but buried it seems. Shoot, I'd settle for simplifying the tax return documents, especially the form to amend a return. That document is a nightmare to fill out.
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    The one thing about the 12% is the 24,000 deduction for a married couple if they make 23,000 they pay 0 tax if they make 40K The pay 12% of 16K not 40K
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    Well, it seems as though this tax reform bill will pass, most likely anyways. And soon. By the end of the year it seems.

    The only thing that stands in Congress' way now is that the House and Senate agreed on two different versions of the bill. And now they have to reconcile which one they like the most and perhaps make a hybrid of the 2?... before it can officially be voted on once more and signed into law. A conference committee will oversee this process.

    If curious on the differences between the House and Senate versions, recommend this -> Highlights of Senate, House GOP bills to overhaul tax code

    Do you have a preferred version? If so, curious why you think it's better. Major differences are: if the individual mandate for health insurance stays or goes, layout of tax brackets, estate tax, mortgage interest deductions, and student loan interest deductions. Far as I can tell anyways.

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    The House just passed the Joint tax bill and the Senate is scheduled to vote on the bill tonight, which is all but guaranteed to pass after Leader McConnell has secured enough votes for its passage. Then it's off to the President's desk for his signature.

    The final version of the bill maintains seven tax brackets, doubles the standard deduction, but also does away with many popular deductions. It will go into effect on January 1, 2018.