It looks like the Republican tax reform bill is close to passing and fiscal conservatives are less than impressed with it but will continue supporting it. The bill is expected to pass the Senate this Friday and will:
- Change individual income brackets;
- Make filing your taxes simpler;
- Cut corporate tax rates;
- Cut tax rates on small business;
- Estate tax kicks in at $11 million instead of $5.5 million;
- You'll pay lower taxes until 2023 and then middle-class tax breaks end;
- Fewer credits and deductions making it simpler to file;
- No more tax incentives for electric cars and your nephew's stupid Prius;
- No deductions for medical expenses;
- No, you can't write off your H&R block tax preparer anymore because you won't need him;
- No deductions for moving expenses unless you're in the military;
- No more college deductions for those paying student loans;
- You can't write off anything stolen from you anymore, the only exception to this rule are those affected by Hurricane Harvey;
This all works if spending cuts are made. If not, it's added to the national debt.
Sen. Rand Paul and Sen. John McCain will back the bill although both hoped for larger cuts. The GOP's "Tax Cut and Jobs Act" will affect everyone and is meant to lower taxes on companies in order to discourage them from taking their businesses overseas and drive competition.
The current corporate tax rate is 35 percent and will be reduced to 20 percent once the bill passes.
There are currently seven brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
The new bill proposes four tax brackets, however, it will alter the rates on taxable income. In the first few years, Americans will be able to keep more of their money after taxes, however, lower-income Americans won't benefit much from it.
Per CNN Money:
10% (income up to $9,525 for individuals; $19,050 for married couples filing jointly)
12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)
24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)
32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)
35% (over $200,000 to $500,000; over $400,000 to $1 million for couples)
38.5% (over $500,000; over $1 million for couples)
The House bill, by contrast, only calls for four brackets: 12%, 25%, 35% and 39.6%.
Listen to Pat's thoughts above and read more on the GOP's tax plan here.