US Tax Changes

This Bill is proposed for 2018 and would not apply to 2017 taxes

 

Corporate Tax Top Rate 20% Permanent

Repatriation 5% on illiquid assets; 12% on liquid assets like cash.

 

Small Business Top Rate 25%

Inheritance Tax Exclusion doubled from $5.46 million to 10.92 million taxed at 40%. Inheritance Tax is planned to be repealed entirely in 2024.

 

Individual Income Tax Changes for 2018

 

Marginal Tax Bracket Rates per household

0%     $1 to $24,000

12%   $24,000 to $90,000

25%   $90,000 to $260,000

35%   $260,000 to $1 Million

39.6% $1 Million or more

Source: AJC 11/3/17

 

Charity Deduction are included in 2018

State & Local Income Tax not deductible in 2018

Property Tax Deduction up to $10,000 included

Mortgage Interest Deduction up to $10,000 included

$1200 middle class family tax cut average

Family Tax Credit added to Earned Income Tax Credit

 

http://www.businessinsider.com/trump-gop-tax-reform-plan-bill-text-details-rate-2017-10

 

If this proposal passed the House, it will go to the Senate for changes. The Senate may make changes to address complaints from High Tax States about the limits on deductions for interest and local taxes imposed by the House version.  The House version includes last minute changes that make their plan more complicated.  The Family Tax Credit and 12% Corporate Rate are unclear. The House needs to publish a 2018 Individual Income Tax Table, so that voters can see what their taxes would be. The Inheritance Tax is not eliminated as promised in this proposal.

 

Good Moves

 

Allowing up to $10,000 for a mortgage interest deduction solves the problem for those who have a 3% mortgage of about $333,000. This encourages homeowners to reduce their mortgage loan liabilities.

 

Allowing up to $10,000 for a property tax deduction allows families to deduct their property taxes on homes costing up to about $700.000.  This encourages lower home prices.

 

Disappointments

 

Like the Healthcare Bill, this proposal has introduced more complexity and confusion.  The “Family Tax Credit” has been included, but was never mentioned until 11/2/17. It suggests that it will include a break for retirees, but there are no details.

 

The Inheritance Tax will not be totally eliminated in 2018. This plan as described on 11/2/17 does not help small businesses, family businesses or those who are self-employed. They still suffer under oppressive and predatory local ordinances and fees.

 

Family businesses are the most stable, least disruptive employers in America. Family farms, ranches and businesses with assets above $10 million will still have to take out loans to pay estate taxes or sell off parts of inherited businesses and land to pay their 40% inheritance taxes. Family businesses should be preferred by the tax code. They more closely support the “make American and hire American” model. 

 

Deductions that will be eliminated include: Medical over 10% of income, Student Loan interest. This signals a squeeze ahead for Healthcare and Education. Both are overpriced and underperforming.

 

The standard deduction will increase from $6350 to $12,000, but the $4050 personal exemption is eliminated. It’s a wash.

On the Corporate Repatriation rate, there is nothing explaining “illiquid assets” This is another poorly executed critically necessary Bill from the House, but this sloppiness continues to be transparent and does expose the legislative process accurately.

 

Norb Leahy, Dunwoody GA Tea Party Leader