NOVEMBER 03, 2017
Congressional Republicans’ proposed tax code overhaul is complicated, but here are a few highlights about what it will do and who stands to win and lose:
The tax cuts heavily favor corporations and wealthy private citizens (which don’t make up much of the rural population), and could explode the deficit, The New York Times reports.
It’s not clear how much the middle class will benefit, if at all.
The plan seeks to eventually repeal the estate tax by 2024, though first it would double the exemption to $11 million. Republicans have said that the repeal will benefit farmers, but it will have no impact on small farmers and relatively little on large farmers. “If enacted, the proposal would further diminish the tax’s ability to promote inter-generational mobility, which has eroded very badly over time. By now, only a tiny group of extremely large estates are subject to any tax at all,” The Brookings Institution says.
“With the release of an ambitious overhaul of the tax code, House Republicans are moving to fulfill a long-held desire of corporate America: a large and audacious tax cut. Yet economists are divided over whether the plan is likely to revitalize the economy or merely bestow a windfall on the wealthiest investors, the Times reports.
“The standard deduction would increase to $12,000 for individuals, from $6,500, and $24,000 for families, from $13,000. But the bill would also eliminate the personal exemption of $4,150 for each taxpayer and dependent, which could limit savings for some filers, especially if they have larger families and are affected by some of the changes to deductions,” NBC News reports. “To help make up for the loss of the personal exemption, the child tax credit is expanded to $1,600, from $1,000. Each taxpayer would also be able to take a “family flexibility credit” of $300. The bill would add a $300 credit for dependents who aren’t children, like aging parents or college students living at home, but only for the next five years.
Except for the first $1,000 of the child tax credit, which would rise with inflation, none of these provisions increase the amount of refundable credits available to families today. That means households that don’t make enough to pay income taxes today are unlikely to see much benefit from the individual changes.”
Written by Heather Chapman
