Posted by 03 November 2017
On Thursday, the chairman of the House Ways and Means Committee unveiled a blueprint for tax reform. While details will change as the bill makes its way through Congress, Rep. Kevin Brady’s outline appears to have broad support among Republicans. The “Tax Cut and Jobs Act” is likely to be very close to what actually emerges if Congress passes a tax bill this year.
Here are a few of this bill’s changes to the current code: (more complete details are available from the Tax Foundation here):
- Reduce tax brackets from seven to four
- Increase the standard deduction from $6,350 to $12,000 for single filers, $9,350 to $18,000 for heads of households, and $12,700 to $24,000 for joint filers
- Repeal itemized deductions except for mortgage interest, charitable, and property tax deductions (property tax deduction would be capped at $10,000)
- Cap the mortgage interest deduction for new home purchases at $500,000 of principle
- End the alternative minimum tax
- Replace the exemption for dependents with a higher child tax credit, and increase the amount of income taxpayers could earn before this credit is phased out
- Lower the corporate income tax rate from 35% to 20%
- Repeal the estate tax after 6 years, and in the meantime increase the amount of the estate exempt from tax to $10 million (indexed for inflation)
Due to the passage of a budget resolution in October that allows for tax reform to be considered under an expedited process not subject to Senate filibuster, this tax legislation will only need a majority of votes in the House and Senate. If Congressional Republicans can remain united and devote time to moving it through the legislative process, it is possible that they could present this bill to President Trump by the end of the year.
Do you think that the House GOP is on the right track with its proposed changes to the tax code? Or would you prefer to see other tax reforms being discussed?