WASHINGTON – Highlights of the GOP tax plan. It proposes to simplify the tax system, cut taxes for the middle class, and reduce taxes on businesses and corporations. Passage is a priority for President Donald Trump and Republicans, who are hoping for a major legislative victory to cite going into the 2018 elections.
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—Income tax rates: Would sets four income tax rates of 12 percent, 25 percent, 35 percent and 39.6 percent. The 25 percent rate would start at $90,000 for married couples, with a 35 percent rate beginning to bite at $260,000 — which means many upper-income families whose top rate is 33 percent would face higher taxes. Individuals making $500,000 and couple earning $1 million would face the current Clinton-era top rate of 39.6 percent.
—Deductions: Would nearly double the standard deduction to $12,000 for individuals and $24,000 for couples, which means significantly fewer taxpayers would itemize deductions like mortgage interest. Would limit the mortgage interest deduction for new mortgages to loans the first $500,000 of the loan, instead of the present $1 million limit. Would eliminate the deduction for state income taxes and caps the deduction for property taxes at $10,000. But personal exemptions of $4,050 for each family member would be eliminated.
—Tax credits: Would increase the per-child tax credit from 1,000 to $1,600 and extends it to families earning up to $230,000. There’s also a new $300 tax credit for each adult in a family.
—Business taxes: Would cut the top corporate tax rate from 35 percent to 20 percent. Would lower the rate for many “pass-through” businesses currently taxed at individual rates to 25 percent, though service businesses such as law firms would not be eligible.
—Multinational corporations: Would establishe a 10 percent tax on profits by overseas subsidiaries of U.S. corporations and seeks to prevent tax gamesmanship that has moved U.S. companies overseas. Would permit “repatriation” of profits stockpiled overseas at a one-time lower rate. Would tighten tax rules on U.S. operations of foreign companies.
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—AMT: Would repeal the alternative minimum tax, a parallel tax structure aimed at ensuring that all people pay at least some tax. It has been criticized for excessive complexity.
—Estate tax: Would immediately double the exemption on taxation of large estates from $11.2 million to $22.4 million and repeal the estate tax entirely after six years.
