Conservative groups praise GOP tax plan

Republicans May Not Be Able to Go It Alone on Tax Reform                 

     

     REUTERS  Carlos Barria

The House Freedom Caucus endorsement is noteworthy because it could ease House passage of a budget plan that's the first step to advancing the tax cut measure through Congress.

Everything is still in the introductory stage, but the Republican tax reform summary rolled out Wednesday offers significant tax cuts, especially for corporations. That's not as low as Trump wanted, but is still a big reduction, to the lowest top rate since 1940.

The plan has more winners than losers, largely because Trump is leaving it to Congress to figure out how to pay for it - or whether to pay for it.

Drastically lower rates for businesses. This could include charging them a higher tax rate, but no final decisions have been made.

Reports have said the plan calls for lowering the top bracket for individuals to 35% from what is now 39.6%.

For individuals, there is much less clarity.

The plan would collapse the number of personal tax brackets from seven to three.

It will be up to Congress to assign the income ranges that would be under each bracket.

The lowest tax bracket would increase from the current 10 percent.

The seven tax brackets that are now in place today are going to be reduced to three brackets: 12, 25, and 35 percent. A repeal of the estate tax.

The White House also wants to increase the child tax credit, which now tops out at $1,000, but it is also leaving the details of any increase up to the committees, too.

According to a Washington Post/ABC News poll released on September 22, for example, conservative Republicans oppose cutting taxes on higher-income people by a 42-50 margin.

Republicans proposed eliminating some existing tax deductions, though they retain deductions for mortgage interest payments and charitable deductions. "Thirty percent of taxpayers itemize, the other 70 percent claim a standard deduction, and that standard deduction is going to almost double in size to 12,000 for individuals and 24,000 for married taxpayers".

-Taxpayers who itemize their deductions. At the same time, however, the standard deduction would double. The credit, now $1,000 per child, would be expanded to higher-income families.

"While some may try to compare this tax reform to what was tried in Kansas, the truth is these two reforms could not be more different", the Republican representative said.

President Trump said Sunday the White House has "totally finalized" a tax plan, but the particulars differed substantially from what has been reported about the proposal. I think there's very little benefit for people of wealth, ' Trump told reporters at the White House. The proposal also gives committees the flexibility to create a fourth bracket that could potentially eliminate a potential tax cut for the wealthiest Americans.

"The main challenge for lawmakers will be finding ways to offset the fiscal cost of the tax cuts that have been proposed", said Scott Greenberg, senior analyst with the Center for Federal Tax Policy at the Tax Foundation.

But the White House is leaving numerous details to the House Ways and Means Committee and the Senate Finance Committee. Orrin Hatch (R-Utah), Sen. "It will deliver the lowest rates on our job creators in modern history and redesign the tax code so our companies can compete and win anywhere in the world, especially here at home".

In theory this means that companies would not be taxed on their overseas earnings, but to prevent erosion of the tax base, Republicans plan to impose some form of tax on foreign profits at a rate that has yet to be determined.

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