By Adam Michel
The House version of the Tax Cuts and Jobs Act is a long-awaited step toward updating America’s tax code.
If you’re a middle-class taxpayer, the bill is has a lot to like. Tax rates are lowered, the standard deduction is doubled, the child tax credit is increased to $1,600, and a parent and non-child dependent credit is added.
If you’re a working taxpayer, employed by a business, or the owner of your own business, there’s even more to like.
The corporate tax rate is cut from 35 percent—one of the highest rates in the world—to 20 percent, immediately. Family-owned and small businesses that pay their taxes as individuals will pay a maximum rate of 25 percent on certain business income.
All businesses will also be able to immediately write off the costs of new equipment for five years. This provision, called “expensing,” allows businesses to invest more in American workers, add new jobs, and raise wages.
According to the Tax Foundation, the House plan could boost the economy by 3.6 percent over the long term, raise average incomes by $2,500 (after taxes), and create hundreds of thousands of new jobs.
The Senate builds on the House’s momentum toward tax reform, and improves on the House bill in six important ways.
1. Lower tax rates at every level.
The House plan reduces the number of tax brackets from the current seven down to four, but does not lower the current top tax bracket of 39.6 percent.
The plan actually raises marginal rates on some taxpayers making over $200,000 and includes a new “bubble tax rate” of 45.6 percent that is intended to take back the benefit of the lowest tax bracket for high-income earners.
The Senate bill improves the House bill by lowering marginal income tax rates for a larger share of Americans—most notably, reducing the current top 39.6 …read more
From:: Daily Signal – Feed