The word has been that the Senate has doomed the middle class to lower wages and high taxes in the future….I even fell into the hype around the Senate vote….but foresight has finally come to me….the House has their bill and now the Senate has theirs….and now the two must come together for a final bill 6to be sent to the president for his signature.
How do the two bills compare?
The Senate passed a nearly $1.5 trillion tax overhaul early Saturday after some late changes were made to the bill. The House passed a nearly $1.5 trillion tax bill two weeks ago that differs in key respects, and the two chambers will have to craft a compromise to send to President Trump, the AP reports. A comparison of the two Republican-written measures:
- Personal income tax rates: The Senate bill retains the current number of brackets, seven, but changes them to 10, 12, 22, 24, 32, 35, and 38.5%. Under current law, the top bracket for wealthiest earners is 39.6%. The House measure condenses seven brackets to four: 12, 25, 35, and 39.6%. Under the Senate bill, the reductions in personal income tax rates are temporary, ending in 2026. They’re permanent in the House bill.
- Individual insurance mandate. The Senate bill repeals the ObamaCare requirement that people pay a tax penalty if they don’t purchase health insurance. The House bill does not.
- Personal exemption. Both bills eliminate the current $4,050 personal exemption.
- Inheritance tax. Currently, when someone dies the estate owes taxes on the value of assets transferred to heirs above $5.5 million for individuals, $11 million for couples. The Senate bill doubles those limits but does not repeal the tax. The House initially doubles the limits and then repeals the entire tax after 2023.
- Tax credits.:The Senate doubles per-child tax credit to $2,000. The House raises per-child tax credit from $1,000 to $1,600 and extends it to families earning up to $230,000. The House bill also creates a $300 tax credit for each adult in a family, which expires in 2023. Both bills preserve the adoption tax credit.
- Standard deduction. Used by about 70% of US taxpayers, currently $6,350 for individuals and $12,700 for married couples. The Senate and House bills both double those levels to $12,000 for individuals and $24,000 for couples.
- Corporate taxes: The Senate and House bills both cut the current 35% rate to 20%, but the Senate has a one-year delay in dropping the rate.
- Alternative minimum tax. The AMT is aimed at ensuring that higher-earning people pay at least some tax. The Senate bill doesn’t repeal it but reduces the number of people who have to pay it. The House measure repeals the tax.
Pass-through businesses: Millions of US businesses “pass through” their income to individuals, who then pay personal income tax on those earnings, not corporate tax. The Senate bill lets people deduct 23% of the earnings and then pay at their personal income tax rate on the remainder. The House measure taxes many of the pass-through businesses at 25%, plus creates a 9% rate for the first $75,000 in earnings for some smaller pass-throughs.
So I would like to tell my readers that many bills have made it this far and failed…..we can only hope that this is one of those bills.
Sadly I am one of those people that does not look for this bill to fail….