Details of GOP tax reform framework revealed

Inside the GOP's tax blueprint

Drastically lower rates for businesses. Fewer income tax rates for individuals. A much larger standard deduction as well as child tax credit. A repeal of the estate tax.

sy88pgw obtained a copy Wednesday of a Republican framework for tax reform of which has been inside works for months as well as will finally be presented Wednesday.

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The blueprint, which President Trump will discuss in a speech Wednesday, omits many critical details as well as numbers of which congressional tax writers will currently have to decide on as they draft legislation.

the idea’s not clear yet, however, just how closely the tax-writing committees will hew to of which framework since the idea’s been negotiated behind closed doors by just six key players through the White House, House as well as Senate. as well as even of which tiny group — known as the Big Six — took a long time to reach broad agreement.

How individual taxes could change

Reduce individual income tax rates: The framework shrinks the number of tax rates to just three through seven today. The proposed rates are 12%, 25% as well as 35%. although the idea will be up to the tax committees to assign income ranges to each rate.

Also, the drop inside top rate to 35% through 39.6% may not stick. The framework gives tax legislators the “flexibility” to add a fourth rate above 35% to ensure reform keeps the tax code at least as progressive as the current system.

If 35% remains the top rate, Democrats will charge of which reform will be just giving a big tax cut to the wealthy.

as well as even though the administration says the idea wants reform to offer middle class tax relief, the framework calls for a 12% bottom rate, which will be actually higher than today’s lowest rate of 10%. although typical families inside 10% bracket today “are required to be better off” when all the alterations under reform are considered together, the blueprint says.

Increase standard deduction: The plan doubles the standard deduction, to $24,000 for married couples as well as $12,000 for single filers.

Doing so could drastically reduce the number of people who opt to itemize their deductions, since the only reason to itemize will be if your individual deductions combined exceed the standard.

Increase child tax credit: The framework calls for a “substantially higher” child tax credit, which today will be worth $1,000 per child under 17. the idea will be up to lawmakers to determine how much higher to make the idea. In addition, the idea could raise the income thresholds for eligibility for the credit, meaning more people could qualify for the idea.

Get rid of valuable tax breaks: The framework proposes the elimination of most itemized deductions, including the state as well as local tax deduction.

the idea also eliminates personal exemptions, worth $4,050 per person. So a family of four could no longer reduce their taxable income by more than $16,000.

Preserve some deductions: Again without specifics, the framework calls for lawmakers to retain tax incentives for home ownership, retirement savings, charitable giving as well as higher education. although of which doesn’t mean lawmakers won’t seek to modify the tax breaks of which currently exist in these areas.

Repeal the Alternative Minimum Tax: The AMT most typically hits filers doing between $0,000 as well as $1 million.

the idea was originally intended to ensure the wealthy pay at least some tax.

Kill the estate tax: What Republicans refer to as the “death tax” only affects about 0.2% of all estates — as well as only those worth more than $5.5 million.

How business taxes could change

Cut corporate tax rate to 20%: Such a drastic drop through today’s 35% rate could put the U.S. rate below the 22.5% average inside industrialized world. although doing so will be expensive. the idea’s estimated to cost roughly $1.5 trillion over a decade.

Drop tax rates on tiny businesses as well as different pass-throughs: The top rate could be 25% down through 39.6% on the profits of so-called pass-through businesses. A pass-through passes its profits through to partners as well as shareholders, who then report them on their individual returns.

The framework will recommend the committees include measures to prevent gaming, in which people try to recharacterize their wages as pass-through profits to get the lower rate.

Change how U.S. multinationals are taxed: Today, U.S. multinational firms pay a 35% tax on overseas profits when they bring them back to U.S. shores. The framework calls for a switch to a “territorial system,” where the overseas profits of U.S. companies could no longer be subject to U.S. tax, just to the tax of the government where the money was made.

The wish will be of which the fresh system will make U.S. companies more competitive with their foreign counterparts, as well as of which they will use more of their foreign profits to invest as well as create jobs inside United States.

although to dissuade U.S. companies through artificially shifting their profits to low-tax (or no tax) havens, the framework also could impose a minimum foreign tax, though the rate will be unspecifiied.

In addition, the idea could offer a low, one-time tax rate on existing overseas profits to entice companies to bring of which money back too. the idea’s not yet clear if the tax could have to be paid even if the money isn’t brought back.

sy88pgw’s Deirdre Walsh contributed to This kind of report

sy88pgw (fresh York) First published September 27, 2017: 10:05 AM ET

Details of GOP tax reform framework revealed

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