Ultimately we will know for sure. Using the 2016 you divide line 63 by line 22 and you see your rate. The only other thing to consider is if line 22 is higher because certain items now are taxable that were not taxable under our current rules
So confusing…what happened with business deductions for the self employed? In one iteration of this reform, 5ise deductions were completely removed.
Is that still the case?
I don’t mind paying taxes. I don’t even mind paying high taxes. I think a robust welfare state is healthiest for a country.
What I do mind is slashing taxes for the wealthy and corporations on the backs of students and the poor.
If we could channel spending into regular developed country things, like universal health care, I wouldn’t be looking at how to emigrate from the US.
? This is the first I heard that Marco Rubio wrote the bill. Is that correct? Are you talking about the right person?
Many people have had input to this bill, some more successfully than others, but I had no idea that Marco Rubio wrote and had control of the bill.
@TooOld4School , other countries know how to play this sad game, too. I have heard predictions that they will now lower their corporate tax rates below that of the United States so that American corporations will continue to locate, at least for tax purposes, overseas.
I have never itemized, I have always claimed head of household and than was better that the little I pay in mortgage interest.
@rosered55 , lamenting the state of the world does not change it. The USA offers a lot of advantages over other countries, but those advantages are not sufficiently high to prevent inversions. The idea that business taxes actually raise revenue is wrong too, the costs just get passed along to the ultimate consumer who pays more, has fewer jobs (with less tax revenue) because other countries are more competitive less to spend, and raises the cost of capital, plus depresses stock values which affect citizen’s retirement accounts.
Zero tax also reduces record keeping costs, eliminates all sorts of compliance costs, and makes decisions a lot more economically rational. There is a huge benefit beyond the $ saved.
If that idea is wrong, then why is it that, even with dynamic scoring, the (mainly business) tax cuts in the current bill will result in a much larger deficit due to lower revenue?
Suppose I’m fortunate enough to have a significant amount of assets in interest-bearing or income-producing assets that are not currently taxed as capital gains. What is to prevent me from forming a corporation to own them and passing through the income to myself, so it is taxed at the lower pass-through rate?
Unless there is also zero personal income tax, there will be lots of rules, record keeping, and compliance costs to keep ordinary people selling their labor from recasting their income as that which is qualified for zero corporate income tax. Just like there is now with rules and loopholes about what class of income something is due to different tax rates and different rules on what expenses relating to it can be deducted.
@ucbalumnus is right. What naive “zero corporate income tax” idealists forget is that tax legislation is adversarial. For every tax imposed, there is an army of professionals figuring out how not to pay it.
This is also why I believe that passing a 500-page tax bill a couple of hours after you finish writing is guaranteed to create hundreds or thousands of lucrative loopholes. And, as always, it’s the richest people and the corporations who can afford to find them and use them.
The Senate bill keeps the deduction for interest on student loans. (Per an article in the Washington Post). The Senate bill also keeps grad student tuition waivers tax free.
The Senate bill has an amendment - Susan Collins maybe - for a $10,000 property tax deduction. Is that in addition to the standard deduction?
It seems like this is an unstoppable train, but wondering about reconciling House and Senate versions - by xmas.
Don’t forget we default on everything December 8th and they need 60 votes in the senate to stop that. What a mess.
@ucbalumnus , @“Cardinal Fang” So, because a few people will cheat, that is a reason not to implement it? My point is that consumers/end users always pay and the cost of corporate tax is spread throughout the supply chain. It’s trivial to distinguish between a W2 employee and the registered owners of an LLC or S corp. If regular W2 employees want to start their own business - and jettison their employer paid health insurance, HSAs, regular paycheck, 401K match, and some semblance of job security more power to them. That is actually a good thing, eventually they will want to grow, hire employees of their own (or take on partners) and increase business activity.
@rockvillemom (or others) what is the current state of property and mortgage deductions in the Senate bill? Does anyone know?
My brain is frying trying to keep everything straight.
I think the mortgage deduction stays for those that have it…and for new purchases up to $500,000.
Property tax deduction stays as does state and local taxes.
But this is a roller coaster ride…so don’t get too comfy.
We double-tax corporate profits in exchange for letting the shareholders be off the hook for corporate liabilities. Hmmm… maybe we should let shareholders pay $0 tax but keep every single one of them liable for corporate misdeeds.
Wow, that is a misunderstanding of what I said. First of all, legally avoiding taxes is in no way cheating. Secondly, if there is a loophole, not just a few but most people with wealth will avail themselves of it. If it is lucrative for people with income-producing assets to form corporations, everyone with significant income-producing assets will legally form corporations and tax revenues will plummet.
Kansas eliminated taxes on passthrough income, and as a result, entirely predictably, people formed passthrough entities to avoid paying taxes. Tax revenues plummeted, and Kansas no longer had enough money to perform basic functions of government like operating schools. They were forced to raise sales taxes, and they are deep in debt. Kansas is a disaster that we would do well not to emulate.
I checked and it is Susan Collins’ amendment that allows up to a $10,000 property tax deduction for those that will still itemize. But that means your allowable mortgage interest + charitable contributions + up to $10,000 in property taxes exceeds $24,000 standard deduction. Right?