U.S. President Donald Trump and Senate Majority Leader Mitch McConnell walk to a lunch with Senate Republicans on Capitol Hill, October 24, 2017. Trump joined the senators to talk about upcoming legislation, including the proposed GOP tax cuts and reform. Photo credit: Drew Angerer/Getty Images.

House Republicans are set to release the text of their tax-reform bill on Wednesday, a move that will for the first time provide details of the effort to cut taxes and streamline the tax code.

Until now, Republican plans have consisted of vague outlines and frameworks that left critical questions unanswered. But when House Ways and Means Committee Chairman Kevin Brady (R-Texas) releases the text of the bill many answers will come into focus. Details will probably leak out in the next few days as Brady shares details with other House Republicans.

The bill will not be the final say on tax policy, as it is subject to changes in committee and must still pass the House and be reconciled with a version yet to be produced in the Senate. It is an important startin g point in what Republicans hope will be a speedy process. They are hoping to put a version on President Trump’s desk by the end of the year.

Here are eight of the most pressing questions that the text of the bill will help answer:

  • Where will the money come from? The usual formulation in tax reform bills is to lower tax rates by eliminating deductions and loopholes, and the Republican framework released last month embraced that approach. Although it spelled out new and lower corporate and individual tax rates, it contained few specifics on which deductions would be eliminated or reduced to help compensate for the expected loss of federal revenue from lowering rates.
  • What are the income thresholds for new rates? The latest Republican plan proposed to replace the current seven tax brackets, which range from 10 percent to 39.6 percent, with three brackets of 12 percent, 25 percent, and 35 percent. But it did not specify the income ranges for those new brackets, which makes it tough to determine whose tax rates would be cut.
  • In addition, Republicans are said to be considering a higher, fourth tax rate on high incomes. Excluding millionaires from a tax cut would help shield Republicans from the usual charges that they are implementing tax cuts for the wealthy.
  • What will happen to retirement plans? Republicans have floated the idea of sharply reducing the amount of money people can invest tax-free in 401(k) accounts. In 2017, individuals of all income levels can put up to $18,000 a year into 401(k) plans and pay no taxes on that income until they withdraw it. Republicans are considering capping the amount invested before taxes at $2,400 a year, which would help the federal treasury by making more income taxable.
  • Trump has vowed on Twitter that there will be no changes to 401(k) plans, but Republicans in Congress seem to be examining changes. In response to the president, Brady said, “We think in tax reform, we can create incentives for Americans to save more and save sooner.” One such approach could be to expand Roth IRAs, in which people invest after-tax money into an account but then withdraw the principal and interest tax-free in later years. Under current law, individuals can contribute $5,500 a year into Roth IRAs. Individuals who make $133,000 a year or more are ineligible, as are married couples making $196,000 or more.
  • Will people from high-tax states pay more? One of the more contentious issues has been Republicans’ proposal to eliminate the deduction for state and local taxes. That deduction helps taxpayers in high-tax states such as New York, New Jersey, and California, and Republicans in those states have advocated leaving the deduction in place. It seems that Republicans are heading toward a compromise that would allow taxpayers to deduct property taxes but not state and local income taxes.
  • How does the middle class fare? In an attempt to deflect criticism that their tax plan benefits the rich, Republicans have cast it as middle-class tax relief by proposing to increase the child tax credit and make it available to more people – though it included no details. They are also gearing other parts of the plan toward the non-rich, and some have suggested making wealthy people unable to take the popular mortgage deduction. Outside groups will quickly analyze what percentage of middle class taxpayers will pay less under the bill, and journalists will surely find somebody who will wind up in worse financial shape under the Republican bill. The bill will not cut everybody’s taxes, but a key question is how many people’s taxes will it cut, and whose? Expect estimates to differ.
  • Under current law, taxpayers can take child tax credits of $1,000 per child, and the break begins phasing out for married couples with $110,000 in income. Median household income in 2016 was about $57,600. The top 20 percent of households had income of about $112,000 or more.
  • Do businesses still receive substantial cuts? Republican plans envision dropping the corporate tax rate to 20 percent, from 35 percent, and capping taxes on small businesses at 25 percent. Do those numbers hold firm? A Bloomberg report Monday suggested that the corporate tax cut could be phased in over five years. Also, how do Republicans work to ensure that wealthy people don’t evade high individual tax rates by claiming that they are businesses? Will businesses still be able to deduct interest expenses and quickly depreciate capital expenses.
  • What is temporary, and what is permanent? Senate budget rules will probably not allow all the tax changes to be permanent. Some will have to expire after 10 years, but it is not known which changes which will be designed to last and which will expire.
  • How much will all this cost? An article of faith among many Republicans is that tax cuts pay for themselves by making the economy grow faster. That might be true in some cases, but a lot depends on how Republicans structure the tax plan. In any event, it is difficult to know how much any increases in economic growth spring from tax cuts and how much stem from other factors.
  • Senate Republicans passed a budget that counts on $1.5 trillion in tax cuts over the next 10 years, to conform with budget rules. Outside groups have estimated the cost as much higher. Republicans favor economic models that factor economic growth into the cost of cuts, but expect a lot of arguing over the true “cost” of the tax changes. The correct answer will be knowable only in hindsight, because any projections on the effect on federal revenues will be only estimates. A related question would be: How much appetite do Republicans have for spending cuts?

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