The bill repeals the Obamacare tax on those without health insurance. Without the mandate, the Congressional Budget Office estimates 13 million people would drop their plans. The government would save $338 billion by not having to pay their subsidies. But health care costs will rise because fewer people will get the preventive care needed to avoid expensive emergency room visits. Senator Susan Collins, R-Maine, approved the final bill once Trump promised to reinstate subsidies to insurers as outlined in the Murray-Alexander bill. The $7 billion in subsidies reimburse them for lowering costs for low-income Americans. But the CBO said it won’t offset the higher health care prices created by the mandate repeal.

It eliminates personal exemptions. Taxpayers currently subtract $4,150 from income for each person claimed. Families with many children would pay higher taxes under the bill despite the increased standard deductions.

The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples. That would help the top 1 percent of the population who pay it. These top 4,918 tax returns contribute $17 billion in taxes. The exemption reverts to current levels in 2026.

It keeps the Alternative Minimum Tax. It increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint. The exemptions phase out at $500,000 for singles and $1 million for joint. The exemption reverts to current levels in 2026.

Child and Elder Care Deductions

The final bill increases the Child Tax Credit from $1,000 to $2,000. Credit is refundable up to $1,400. It increases the income level from $110,000 to $400,000 for married tax filers.

The bill allows parents to use 529 savings plans for tuition at private and religious K-12 schools. They can also use the funds for expenses for home-schooled students.

It allows a $500 credit for each non-child dependent. The credit helps families caring for elderly parents.

Business Taxes

The final tax bill lowers the maximum corporate tax rate from 35 percent to 21 percent, the lowest since 1939. The United States has one of the highest corporate tax rates in the world. But most corporations don’t pay that much. On average, the effective rate is 18 percent. Large corporations have tax attorneys who help them avoid paying more.

It raises the standard deduction to 20 percent for pass-through businesses. The deductions are limited once the income reaches $157,500 for singles and $315,000 for joint. Pass-through businesses include sole proprietorships, partnerships, limited liability companies, and S corporations. They also include real estate companies, hedge funds, and private equity funds.

The bill limits corporations’ ability to deduct interest expense to 30 percent of income. For the first four years, income is EBITDA, but reverts to earnings before interest and taxes thereafter. That makes it more expensive for financial firms to borrow. Companies would be less likely to issue bonds and buy back their stock. Stock prices could fall. But the limit generates revenue to pay for other tax breaks.

It allows businesses to deduct the cost of depreciable assets in one year instead of amortizing them over several years. It does not apply to structures. To qualify, the equipment must be purchased after September 27, 2017, and before January 1, 2023.

The bill eliminates the corporate AMT.  The corporate AMT had a 20 percent tax rate that kicked in if tax credits pushed a firm’s effective tax rate below that level. Under the AMT, companies could not deduct research and development spending or investments in low-income neighborhood. Elimination of the corporate AMT adds $40 billion to the deficit.

It advocates a change from the current “worldwide” tax system to a “territorial” system.Under the worldwide system, multinationals are taxed on foreign income earned. They don’t pay the tax until they bring the profits home. As a result, many corporations leave it parked overseas. Under the territorial system, they aren’t taxed on that foreign profit. They would be more likely to reinvest it in the United States. This will benefit pharmaceutical and high tech companies the most.

The tax bill allows companies to repatriate the $2.6 trillion they hold in foreign cash stockpiles. They pay a one-time tax rate of 15.5 percent on cash and 8 percent on equipment. The Congressional Research Service found that a similar 2004 tax holidayprovided little boost to the economy. Companies distributed repatriated cash to shareholders, not employees. The repatriation could also raise Treasury note yields. Corporations hold most of the cash in 10-year Treasury notes. When they sell them, the excess supply would send yields higher.

The bill allows oil drilling in the Arctic National Wildlife Refuge. That’s estimated to add $1.1 billion in revenues over 10 years. But drilling in the refuge won’t be profitable until oil prices are at least $70 a barrel.

It retains tax credits for electric vehicles and wind farms.

It cuts the deduction for orphan drug research from 50 percent to 25 percent. Orphan drugs target rare diseases.

The bill cuts taxes on beer, wine, and liquor. The Brookings Institute estimates that will lead to 1,550 more alcohol-related deaths each year. The study found that lower alcohol prices are directly correlated to more purchases and a higher death toll.

** Trump’s Promises No Longer in the Plan **

Trump’s 2016 proposal allowed up to $2,000 to be deposited tax-free into a Dependent Care Savings Account. The account would grow tax-free to pay for a child’s education. Taxpayers could also receive a rebate for the Earned Income Tax Credit ​and deposit it in the DCSA.

His proposal also eliminated the AMT for individuals.

Trump promised to increase taxes on carried interest profits. Carried interest is taxed at 23.8 percent instead of the top 39.6 percent income rate of 39.6 percent. Firms must hold assets for a year to qualify for the lower rate. Trump campaigned on making hedge fund managers pay their fair share.

Trump promised to end the Affordable Care Act tax on investment income.

How the (tax/health plan) Affects You

The tax plan helps businesses more than individuals. Business tax cuts are permanent, while the individual cuts expire in 2025.

Among individuals, it would help higher income families the most. Everyone gets a tax cut in 2019. But in 2021, taxes will increase on those making $30,000 or less. The lower tax rate won’t make up for the deductions and credits they lose. By 2023, costs will rise on everyone who makes less than $40,000 a year.

The tax bill makes the U.S. progressive income tax more regressive. The Tax Policy Center found that taxpayers earning in the top 1 percent would receive a larger percent tax cut than those in lower income levels.

By 2027, those in the lowest 20 percent would pay higher taxes. That’s because the tax cuts expire in 2025.

The increase in the standard deduction would benefit 6 million taxpayers. That’s 47.5 percent of all tax filers, according to Evercore ISI. But for many income brackets, that won’t offset lost deductions..

The bill ignores the lowest-income families. That’s because 76.5 million Americansdon’t make enough to pay taxes. The plans also don’t help the third of taxpayers who have incomes that fall below current standard deduction and personal exemptions, according to New York University law professor Lily Batchelder.

The bill increases the deficit by almost $448 billion over the next 10 years. The tax cuts themselves would cost $1.47 billion. But that’s offset by $700 billion in growth and savings from eliminating the ACA mandate. The Tax Foundation said the plan would boost GDP by 1.7 percent a year. It would create 339,000 jobs and add 1.5 percent to wages.

The U.S. Treasury reported that the bill would bring in $1.8 trillion in new revenue. It projected economic growth of 2.9 percent a year on average. The CBO estimates just 1.9 percent growth. The Treasury report also assumes the rest of Trump’s plans will be implemented. These include infrastructure spending, deregulation, and welfare reform.

Budget-conscious Republicans have done an about-face. The party fought hard to pass sequestration. In 2011, some members even threatened to default on the debt rather than add to it. Now they say that the tax cuts would boost the economy so much that the additional revenues would offset the tax cuts. They ignore the reasons why Reaganomics would not work today.

The impact on the $20 trillion national debt will eventually be higher than projected. Congressional leaders admit that a future Congress will probably extend the tax cuts that expire in 2025.

Increase in sovereign debt dampens economic growth in the long run. Investors see it as a tax increase on future generations. That’s especially true if the ratio of debt to gross domestic product is near 77 percent. That’s the tipping point, according to a study by the World Bank. It found that every percentage point of debt above this level costs the country 1.7 percent in growth.

Supply-side economics is the theory that says tax cuts increase growth. The U.S. Treasury Department analyzed the impact of the Bush tax cuts. It found that they provided a short-term boost in an economy that was already weak. But the economy in 2017 is strong.

Also, supply-side economics worked during the Reagan administration because the highest tax rate was 70 percent. According to the Laffer Curve, that’s in the prohibitive range. The range occurs at tax levels so high that cuts boost growth enough to offset revenue loss. But trickle-down economics no longer works because the 2017 tax rates are half what they were in the 1980s.

Many large corporations confirmed they won’t use the tax cuts to create jobs. Corporations are sitting on a record $2.3 trillion in cash reserves, double the level in 2001. The CEOs of Cisco, Pfizer, and Coca-Cola would instead use the extra cash to pay dividends to shareholders. The CEO of Amgen will use the proceeds to buy back shares of stock. In effect, the corporate tax cuts will boost stock prices, but won’t create jobs.

The most significant tax cuts should go to the middle class who are more likely to spend every dollar they get. The wealthy use tax cuts to save or invest. It helps the stock market but doesn’t drive demand. Once demand is there, then businesses create jobs to meet it. Middle-class tax cuts create more jobs. But the best unemployment solution is government spending to build infrastructure and directly create jobs.

The bill could help immigrants who were protected by Deferred Action for Childhood Arrivals. One of Trump’s immigration policies is to end the program in March 2018. Senator Jeff Flake, R-Ariz., got Senate leaders to agree to make the program permanent in exchange for his vote.

How Trump’s Other Policies Affect You: Immigration | Health Care | Job Creation | Debt Reduction | NAFTA | Trump Versus Obama

resource: the internet

thebalance.com  By Kimberly Amadeo Updated December 22, 2017

if you see something not accurate let her know