Just Taxes Digest: Important things you should know about the Republican tax plan

By the Institute on Taxation and Economic Policy

Average taxpayers in all income groups get a tax increase, especially the poor
Some low-income people would face a tax hike starting in 2019, the second year the plan would be in effect. This would happen because the Earned Income Tax Credit (EITC) becomes slightly less generous in 2019 as the income limits and earnings thresholds used to calculate the credit would be adjusted at the slower inflation rate. Also, every income group would face higher taxes after 2025. Read more

A corporate tax cut would benefit coastal investors
This analysis reveals that poorer states such as West Virginia, Oklahoma, Alabama, and Tennessee would be largely left behind by a corporate tax cut, while the lion’s share of the benefits would remain with a relatively small number of wealthy investors who tend to be concentrated in larger cities near the nation’s coasts. Read more

The size of the pass-through rate will have negligible effect, mostly benefit the rich
Pass-through businesses are not taxed at the corporate tax rate, rather owners of these businesses pay taxes on profits on individual returns. Senators are weighing what the revised pass-through rate should be. The current bill provides a deduction of 17.4 percent of income from a pass-through business, with certain restrictions. Some senators want that break increased to 20 or 27 percent of income. This analysis reveals that whether the rate is 17.4 percent or 27 percent, the top 1 percent will reap the greatest benefit, and it will make little difference to lower-income taxpayers. Read more

Property tax changes are symbolic, not substantive
Lawmakers continue to tinker around the edges in an attempt to make the Senate tax cut measure more palatable. Maine Sen. Susan Collins, for example, is pushing hard for an amendment to allow taxpayers to deduct up to $10,000 in property taxes. Adding a property tax deduction may sound like a reasonable compromise, but an ITEP analysis reveals that the amount of state and local taxes deducted by Maine residents would plummet by 90 percent under this change, from $2.58 billion to just $262 million in 2019. Read more

Lawmakers are allowing special interests to trump the voices of their constituents
The Senate Finance and Budget committees’ quick approval of a major tax cut enables the Trump and Republican leadership’s plan to give colossal tax breaks to corporations and the wealthy. Our elected officials are cavalierly ignoring the wishes of the American people and setting the nation on a damaging path that will redistribute wealth upward, balloon the deficit and starve the federal government of resources necessary to meet basic priorities. Read more

Six more things to know about the Senate tax plan
This report looks at six components of the Senate tax plan, including: Why nearly 30 percent of taxpayers will face tax increases under the plan; how corporate tax changes will disproportionately benefit 15 states and the District of Columbia; why pass-through businesses would face a tax hike after 2025; what percentage of the pass-through tax breaks and corporate tax breaks go to the top 1 percent, and why residents of 19 states will collectively pay more taxes by 2027 than they pay now. Read the report

Real estate investors like Trump will continue to benefit from generous tax breaks  
The federal tax code includes special tax breaks that advantage wealthy real estate investors like President Donald Trump. Real estate investors can claim losses much more quickly and easily than other taxpayers, and they also have several methods to delay or avoid reporting any profits to the IRS. Trump pushed these loopholes to their extreme 20 years ago. This report outlines how and why Congress should close these loopholes. Read more

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