Public's One-Word Summary of the Tax Bill
“A Record; A First; Keeping Promise; Helping all Americans;
Up is Down; Dirt is Clean; Bad is Good; Trust Me;
Believe It; Bigley”
Believe It; Bigley”
(/s/ Donald J. Orwell)
Excellent
rundown from Axios here
in laymen terms showing “short term
vs. long term” impact in several provisions of the tax “reform” bill. Also,
great other articles at this same site – check ‘em out.
Super job by these
Axios reporters: Caitlin Owens, Dan Primack, Bob Herman,
David Nather, David McCabe, and Ben Geman
Individual taxes – Short
term:
1. Across-the-board lowering of individual tax
rates starting next year, including a lower top rate of 37 percent.
2. Significant reduction in number of people who
use itemized deductions, as the standard deduction is doubled and many popular
write-offs are limited.
3. Expansion of the child tax credit, which
doubles from $1,000 to $2,000 and is refundable up to $1,400.
4. Cap of up to $10,000 on state and local tax
deduction, which will hit some itemizers in expensive — mainly blue — states.
5. Threshold for mortgage interest deduction
lowers from $1 million to $750,000, which could hit both high-end homeowners
and homeowners in expensive markets.
6. New
20 percent deduction for pass-through income, which will almost certainly
incentivize workers to find ways to shift wages into pass-through income.
Long term: Congress
will have to decide in the next eight years whether to make these tax cuts permanent, which will cost trillions of dollars, or to let them expire and
essentially raise rates on the middle class.
Business
taxes – Short Term:
1. Companies with heavy debt loads are going to
need to rework their finances, and quickly, as the 100% deduction for corporate
interest has been slashed.
2. Corporate tax will drop from 35% to 21%,
beginning in 2018.
3. The corporate AMT will end, also starting in
2018.
Long
term: Most
big companies set their 2018 hiring plans before the tax plan was a sure thing.
So if Republicans are correct that the bill will spur a new hiring boom, it
won't become evident until at least the second half of the year.
Health care – Short
term:
1. The deduction for medical expenses will
expand for two years.
2. For 2017 and 2018, people with costly medical
problems will be able to deduct any expenses over 7.5% of their income, rather
than the current 10%.
3. The repeal of the individual mandate will
force insurers to leave the ACA (Obama-care) market if they believe it's no
longer worth the headache, or they will jack up premiums to cover the costs of
a population that likely will be sicker.
4. Individual mandate repeal will boost the
ranks of the uninsured. It will mostly affect people in the individual market,
who will either voluntarily leave or consider the coverage unaffordable.
5. Pharmaceutical companies are expected to
bring back offshore cash to take advantage of the
15.5% repatriation tax. Wall Street advisers are licking their chops over the
prospect of stock buybacks and lots of pharma mergers and acquisitions.
6. For-profit health insurers will reap huge windfalls from the large drop in the
corporate tax rate and will dump a large chunk of that money back to investors.
7. Federal law limits those profits, but they
still will be substantial considering how much money insurers handle.
Long term:
1. The orphan drug tax credit, which gives drug
makers an incentive to research treatments for rare diseases, will be cut in
half. Starting next year, it will only cover 25% of clinical testing expenses,
rather than 50%. Watch to see if the progress in developing new treatments
slows down.
2. The tax bill will cause the federal deficit
to swell and therefore will enact automatic spending cuts to major health care
programs unless the law forcing those cuts is waived. Medicare faces a $25
billion cut in 2018 and more over time, which would hurt beneficiaries,
doctors, hospitals and other companies that rely on Medicare.
Technology –
Short term: Big tech companies, Apple chief among them, may take
advantage of a lower rate to bring back cash and other assets they're currently
holding overseas. They're already under pressure to invest that money in the
United States.
Long term:
1. The switch to a so-called “territorial” tax
system — where income is only taxed by the country where it is earned — will be
a boon for large tech firms with significant operations outside the United
States.
2. Tech firms will be able to take advantage of
a permanent a tax credit for research and development.
3. If the ACA (Obama-care) collapses with the
repeal of the individual mandate, it could have an effect on the ability of startup
founders to strike out on their own and maintain health coverage.
Energy – Short term:
1. Companies will benefit from provisions
including the lower overall corporate rates, the ability to quickly write off
certain capital expenses, and repeal of the corporate AMT.
2. However, the bill also removes the Section
199 domestic manufacturing deduction that benefits the industry.
Long term:
1. The coastal plain of the Arctic National
Wildlife Refuge (ANWR) will be open to oil drilling, giving companies a chance
to tap would could be huge hydrocarbon resources. (Note: Was bad idea before and still is as seen here).
2. The bill requires two lease sales within the
next 10 years, including one within four years. But given the long leasing and
development process, any oil commercial production there could be a decade
away.
3. The bill also requires sale of a total of
seven million barrels of oil from the Strategic Petroleum Reserve during fiscal
years 2026-2027 to raise revenue.
Finally more related here and from a lots of other places with their keen analysis.
As the famous quip says:
“It ain’t over till
it’s over” (Yogi Berra).
Just wait until the public feels the pain and believe me,
it’s just around the corner. And the GOP 2018 campaign sound bite without any details
will be: “We fixed the tax code.”
Thanks for stopping by and speak out whenever and
wherever you can.
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