Politics

Trump Tweets Success as Final Tax Bill Passes House

As expected, the long-awaited GOP tax bill was passed by the House today in a 224-201 vote after several provisions had to be revised to conform to Senate rules. The bill was introduced through a process called budget reconciliation, which allowed for a simple majority vote to avoid a filibuster– a debate tactic used by legislators to stall or prevent a bill’s passage. President Trump is expected to sign the monumental legislation before Christmas.

Despite the fact that Trump and Senate Majority Leader Mitch McConnell have butted heads in the past over issues such as healthcare, Trump congratulated McConnell in a tweet for his “fantastic job both strategically & politically” on the passage of the bill. Trump added, “I could have not asked for a better or more talented partner.”

According to the Tax Policy Center, a non-partisan group, families earning between $50,000 and $75,000 will save $890 per year, while those earning between $100,000 and $200,000 will $2,260 in savings.

Click here to estimate how the new tax bill could affect you and your family.

Key provisions of the Tax Cuts and Jobs Act include:

  1. Repeal of the individual Obamacare mandate that required individuals to purchase health insurance – Beginning in 2019, the Affordable Care Act’s mandate is eliminated.
  2. New tax brackets – 5 instead of 7, but the income ranges change. They start at 10% and rise as follows: 12, 22, 24, 32, 35, and 37%. Previously, the rate for people making over $500,000 ($600,000 for joint filers) was 39.6%.
  3. Changes to the Alternative Minimum Tax (AMT), the additional tax placed on people with higher incomes. The AMT is retained in the new bill for individuals, but the exemption has been increased from $500,000 for individuals and $1M for joint filers.
  4. State and Local Taxes (SALT) – up to $10,000 in property tax, and state and local income tax can be deducted.
  5. The Child Tax Credit is doubled to $2,000 per qualifying child under age 17 – with full refunds up to $1400 for families who owe little to no taxes.
  6. The mortgage-interest rate deduction has been reduced. New homebuyers can deduct mortgage interest only up to $750,000 (previously $1M).
  7. Estate taxes remain at 40% but the exemption level doubles to over $10M for individuals and $20M for joint filers.
  8. Medical expenses can be deducted if they exceed 7.5% of your adjusted gross income.

Corporations will see the following changes:

  1. A reduction in the corporate tax rate from 35 to 21%.
  2. Elimination of the Alternative Minimum Tax (AMT).
  3. A one-time tax on overseas earnings.

The largest tax overhaul in 30 years is being called a “big Christmas present” by the president, but the bill is being heavily criticized by Democrats, who are reporting that the middle class will suffer, while big corporations will reap its benefits. Although supporters of the bill have assured Americans that workers should see an increase in their paychecks as early as February, some are opposed to the fact that the tax cuts for individuals come with an expiration date of 2026, while the corporate tax reduction is permanent. GOP leaders say that they believe future legislators will continue the tax cuts beyond their expiration date.

The IRS has indicated that new tax tables may be available by February. However, payroll companies and employers alike are awaiting direction on whether or not new W-4 tax forms will be released based on the tax bill’s changes to personal exemptions. If that is the case, pay increases may be delayed if employees have to submit new W-4 forms.

tax chart bill passes

*Chart does not account for the Medicare surtax on high earners. Source: House of Representatives, Tax Cuts and Jobs Act, December 16, 2017

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Kim
3 years ago

Thank goodness something really BIG got through Congress. President Trump’s other efforts count, too, but this bill will make a noticeable difference in peoples’ wallets, which should help Republican/Conservative candidates sail through the mid-term elections. They need to learn how to “show and sell” it (see Sandy Beaches’ comment, and replies) to voters.
Savings on the corporate side are more impressive, and should rev up the economy to levels of GDP that we haven’t seen in decades. I am inclined to go back into business again, now that the wind is at my back. I can’t wait to see what happens in the New Year, but I’m pretty sure it will include trickle-down economics. A dozen or so large corporations have already announced bonuses and raises as a result of this legislation.
But let us not be lulled into complacency. The swamp continues to muck up and requires vigilance to see that it is properly drained. I’d like to hear from Steve Moore, Art Laffer, and others, on a regular basis. Instead of waiting 2 days before an election, why not immediately send out a postcard, or have legislators do public service announcements or set up an “easy” website that allows viewers to calculate their own savings? Draw pictures or show simple bar graphs, but get it out there, senators and representatives!
Those who are less convinced need to hear it over and over again; they need REAL results that show up on their bank statements. Or on their pay stubs. There are many who claim this doesn’t affect them. They’re not big investors. But a substantial majority of citizens have a quiet interest in the stock market—whether it’s in the form of an IRA, a 401K, a pension, or some other retirement account—which, by the way, has been “winning” for the past year.

Larry in PRNJ (People\'s Rep of NJ)
3 years ago

Don’t mean to rain on anybody’s tax parade but let me share a shower that just fell on me. To my knowledge nothing has been reported, even by the rabid anti-Trump media, that the personal exemption is eliminated in the new tax bill. It reduces my expected tax reduction by $972.00 The personal exemption currently is $4,100 per person. The effect of which greatly reduces the punch of the doubling of the standard deduction. Mind you I am not complaining about a smaller tax decrease, I will take any and all they are willing to shell out. My beef is with not getting ALL the info on this bill regardless of source. Thankfully they left in the slight increase in the standard deduction for those 65 and older of $1,250.

https://www.thestreet.com/story/14427666/1/highlights-of-new-tax-law-that-kick-in-for-2018.html

PaulE
3 years ago

Both the WSJ and IBD covered this item. Also the Financial Times of London covered this aspect as well. I am sure the Dems will get around to harping on this item as well in time. Yes, some people will win and some people will lose under the new rules, but the overall net benefit for the country as a whole is positive.

Larry in PRNJ (People\'s Rep of NJ)
3 years ago
Reply to  PaulE

I agree that the net effect for the economy will eventually be positive, I hope. I don’t like “sales pitches”, especially ones that over-emphasize certain aspects of a policy in order to “sell” it while trying to hide others. With a predominately left media that practice will come back to bite hard. Consider the pitch about the doubling of the child credit. Sounds good until it is realized that without the exemption for the child, the credit is meaningless for taxpayers in the 22% bracket and above. And at age 17 the credit disappears along with an exemption for all brackets. By giving the “hard” sell on the doubling of the standard deduction and the child tax credit the republicans have set themselves up for a very tough go come November 2018. Especially if the economy does not take off several months before. Lowering the top rate by 2.6% will easily become ammunition for the class warfare crowd when compared to the net effects of the so-called “doublings” for the middle class, who were said to benefit greatly by this bill. The middle class are the ones who put politicians in office.

PaulE
3 years ago

The goal of tax reform was supposed to be both improved economic growth and reduced government spending to address the deficit over the long run. At least that is how the GOP sold the message. Now if they had gone with the plan Art Laffer wrote for Trump and he ran on during the campaign, that is indeed what would have been delivered. Unfortunately, neither Ryan nor McConnell liked the Laffer plan, because it actually reduced government spending, ended all but 5 deductions and was truly a flat tax of 15 percent across the board for everyone after a more generous standard deduction than what we ended up with. So Congress’ power to leverage campaign donations by offering tax deductions or credits to various entities (groups, companies, individuals, etc.) would have gone away. To politicians, that is unacceptable. So instead Ryan and McConnell tossed Trump’s plan in the garbage and we ended up with the Ryan “Better Way” plan. Remember, the President can propose anything, but the ONLY legislation that gets through Congress is what Congressional leadership wants to get through Congress. Think “take it or leave it” and you get the idea. After the 8 month fiasco of the non-repeal of Obamacare, President Trump needed a win or the Dems and media would have really ratcheted up their negative PR warfare. So he pretty much had to accept whatever Ryan and McConnell were willing to give him on “tax reform”.

So since Congress didn’t want to do any serious spending cuts and thankfully the horrendous BAT portion (minimum of at least $5 trillion in new taxes on the American people over 10 years) of Ryan’s plan was killed months earlier, because enough people realized it would have applied to almost everything, the total to play with over years was “only” $1.5 trillion dollars. That would have still been enough to give everyone some decent tax cuts, if not for Senators Rubio and Lee insisting on not only doubling the CTC, but turning it into a refundable tax credit like the EITC. All so Rubio can run against Trump in 2020 and, if he gets the GOP nomination, Senator Lee would be his VP pick. The CTC has been essentially transformed into a new, very expensive welfare-like program. Estimated cost being $180 billion dollars and should never have either been doubled or made refundable.

So that meant they had to cut back on something elsewhere. What they ended up with is capping SALT at $10,000, retaining the AMT with a higher threshold and keeping the estate tax with a higher threshold. So many more people negatively impacted to accommodate two Senators with their eye on the WH in 2020. So yes, the GOP in Congress have created a number of unnecessary, unforced errors for themselves and opened themselves up on a number of fronts for Democrat and media attacks, if the economy doesn’t perform flawlessly. All of which could have been completely avoided, if either Congress had agreed to use the Trump tax plan to start with or Senators Rubio and Lee weren’t the self-serving RINOs they are. Unfortunately, that is water under the bridge at this point. Like I said, there will be some winners and some losers under the new rules. It didn’t have to be that way, but this is the Congress we have.

Rick
3 years ago

Larry, not to rain on your parade, but I saw this reported in the news after the details were released. I think the mainstream media put it out there as a way to bash Trump, but most people don’t understand the difference in an exemption and a deduction, and don’t read past the headlines anyway. Since it didn’t accomplish their Trump-bashing, it gradually got left out of the news. Most people will benefit from the higher brackets, lower rates and greater child tax credits. I hadn’t heard, though, they left in the 65 and older increase in the std deduction. If they’d have indexed the social security thresholds like they should have been in the first place, I’d be happy.

Sandy Beaches
3 years ago

The Republicans have never been known for doing a good job explaining anything. This needs a very basic visual that explains it. And I mean basic. Some guy, unfortunately I don’t remember his name, not long ago was on FOX and using a simple diagram quickly explained the bill as it was known at that time. He did a GREAT job! The show hosts said the same thing. One even said that, that when the bill was ready he should be hired to take the message to the American people.

Republicans; Democrats have 90% of the media behind them 100% of the time. We all know very well they are purveyors of Fake News, Yellow Journalism, Hate Speech, and more. Most people today live in a fast paced electronic world. They’ve lost the attention span to be told anything as big as the Tax Cut & Jobs bill. Roll it out in small chunks and for God’s sake make it somewhat entertaining.

The polls show the left is wining on the show and tell front. Wake up Republicans!!!!

PaulE
3 years ago
Reply to  Sandy Beaches

So the goal should be the following:

Create a series of presentations designed to explain all the major aspects of the tax cut plan to the public, because the public can’t or won’t read any of the several existing, already simplified explanations on-line. Not an unreasonabke request, as I suggested the same thing. I too realized that it is just too much effort for a lot of people to research anything themselves. Even for something that will directly impact them is such a major way. Yes, sad but true. Oh but you add an additional requirement I didn’t think was necessary for people in our category. I understand such a requirement for much of the younger generations, as that is how they have been conditioned. All the presentations have to be kept very short, as the attention span of the public has apparently dwindled to the level of 5 year olds. And we wonder why we have the type of people we have representing us in Washington? NOT!!!

Sorry, but I just couldn’t resist. If the majority of the American people, seniors included, only have the attention span of 5 year olds and have to have everything spoon fed to them in short, simple bites, that doesn’t bode well for the country’s future. Oh well, your post was a fun read. I love the reference to Show and Tell.

Kim
3 years ago
Reply to  PaulE

While the left does its show and tell, maybe the right needs to do some show and sell!

PaulE
3 years ago
Reply to  Kim

That has always been where the GOP fails miserably. Most can only repeat a few talking points that have been prepared for them by paid outside consultants or Congressional staff members. So they cannot converse on the benefits of the tax plan in a way that either has a natural, free-flowing manner to it nor is relatable to the average person. Look at the average TV interview from Congressional GOP members. Even on FOX Business, which is as Republican friendly and pro-business as you are going to get in this country, most GOP can’t answer simple questions. Most ignore the question asked and just repeat one of a half dozen talking points that they have memorized. That is all they are honestly capable of. Thus they ruin the opportunity to educate the masses on the benefits of the various pieces of the new tax law.

On the other hand, when President Trump is interviewed for several minutes, he can explain various parts of the tax plan by relating them to how they actually impact businesses and people in the real world. He makes it relatable to people. Folks like Mumbles McConnell, Stretch Ryan and other Congressional lifers can’t duplicate that level of performance, because 1) they have never worked in the private sector and 2) they have ZERO real world experience running a business of any size or complexity. So what we usually see is political consultants like Karl Rove being trotted out, who may know political spin, but they sure as **ll don’t know economics or finance well enough to sell the tangible benefits in this tax bill.

Andrea Rogers
3 years ago
Reply to  Sandy Beaches

Great point!

Chuck
3 years ago
Reply to  Sandy Beaches

And not one word about balancing the budget by cutting spending on unconstitutional agencies like the Dept of Education, Agriculture, HUD, Energy, etc which comprise a vast amount of the federal budget. May God have mercy on the financial future and survival of America.

PaulE
3 years ago
Reply to  Chuck

Yes, Congress really messed up what could have been a much larger, all inclusive opportunity at real tax reform, when they refused to do any meaningful spending cuts in the areas you mentioned. Instead of the tax cuts being limited to $1.5 trillion over 10 years, they could have had $4-$5 trillion to work with. That would have allowed for lower rates for everyone and a greatly simplified tax code. Then again, that is what Washington does. They take a golden opportunity to do something truly positive and transformative for the nation and turn it into small, incremental change and call it “a major victory”. The administrative state hates change, so they do this kind of self-sabotage to ensure continuity of government.

D McCormac
3 years ago

CNN’s calculator is broken!
I am retired CPA who helps friends and family do their taxes. Based on last year’s filings 90% will find savings NEXT year. The other 10% (me) will save as well because last year was a very unusual mix of low income and medium deductions. My average savings will be much higher than the CNN calculator shows. More fake news from CNN.

Marcy Scrot
3 years ago
Reply to  D McCormac

I am retired and will see no benefit as usual. And the SS increase is eaten up by the raise in Medicare premiums and drugs will also be fewer covered and cost us more.

D McCormac
3 years ago
Reply to  Marcy Scrot

I do help several couples who are older and retired that will only save small amounts. But they already pay a very small percentage in FIT because SS earnings are mostly tax free and those over 65 already get extra personal exemption amounts. I too will soon see some tax relief as SS earnings exemptions. I am still happy that young workers will get some help when they need it most. I just hope they save something for their retirement.

Andrea Rogers
3 years ago
Reply to  D McCormac

Thank you for the info!

mike failla
3 years ago

The left always complains about anything the president does. Did you get a load of cryin chuck the schmuck? What a joke. They are against more jingle in your pocket which means the economy will improve even more and that equates to a loss of power for the left. Oh boo hoo. They have been screwing us enough. Payback time!

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