Student News of Skutt Catholic High School

The Flightline

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What You Need to Know About the 2017 Tax Reform Bill

Essential information on how the proposed bills will affect individuals

CNN Money

Maria Miller, Flightline Editor-in-Chief

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Dec. 4, 2017 – The Senate’s tax-writing committee passed, and already amended the 2017 Tax Reform bill; while it is still very subject to change, it is up for vote in the Senate this week. This bill differs from the reform bill passed in the House of Representatives in November in a few key ways, and here is what you need to know about both them.

Brackets and Rates 

The bill proposed in the Senate consists of the individual tax brackets: 10%, 12%, 22%, 24%, 32%, 35% 38.5%; in contrast, the bill in the House only allocates 12%, 25%, and 39.6% brackets. The majority of families at Skutt Catholic will fall under the 22% and 24% categories in the Senate bill, and 25% in the House; resulting in a decent tax cut for a large proportion of the Skutt Catholic community.

Both bills would nearly double the amount that is subtracted from incomes before the tax rate applies, which means, the majority will be paying less; they also both propose lower rates to stimulate the economy by keeping more money in the publics pocket. However, the Senate bill retracts the lower rates in 2025 returning the rates to those set under the Obama Administration.

Deductions 

The House and Senate bills both effectively double the standard deduction, giving more money back to all taxpayers, and eliminate the state and local tax deduction.  The majority of the people who take advantage of this deduction are in the upper 10%.

The teacher deduction is a point of stark contrast between the two bills; the Senate doubles the amount teachers can deduct for classroom supplies ($250 to $500), while the House bill removes it entirely.

The Senate bill eliminates the ability for individuals to file for a deduction on their property, state, local income, or sales taxes. The majority middle class families take advantage of these deductions. Under this bill, those families can expect to have a cushion from the standard deduction, but will now be required to pay in full in many areas that they have not in recent history.

This aspect of the Senate bill was met with harsh opposition in the House; they allocated for a property tax deduction up to $10,000. The only major deduction that still remains in both bills are reserved for charities and home mortgages.

Credits

A substantial benefit for many Skutt Catholic families under the Senate bill is the expansion of child credit: up to $2,000 per child, which is double what we have today. On a similar trend, the House proposes a credit of up to $1,600. However, this increase has been widely criticized because it does not generally apply to the lowest income families due to the fact that it is non-refundable.

The bill proposed by the Senate also expands credit by raising the income in which the credit no longer applies, making the extra cash more available to high-income families.

Aspects Repealed 

One of the biggest aspects of this tax reform is the repeal of Alternative Minimum Tax (AMT) in both bills. The AMT was set in place to eliminate the ability to get so many tax breaks that you pay nothing at all. However, many experts now say that the intent of the AMT is not being met, and therefore, it is complicating the process.

Both bills have also repeal the individual mandate to purchase health insurance in order to offset the cost of the reform by reducing the amount the federal government spends on insurance subsidies. This might have a negative side effect of increasing premiums due to the likelihood of many Americans not purchasing insurance.

The Estate Tax, a tax applying to inherited assets of $5.49 million or more, has been repealed by the Senate bill. This doesn’t apply to the majority of citizens, but it is something the GOP has been targeting for years.

Maria Miller - Flightline Editor-in-Chief

Maria became a member of The Flightline in January of 2016. She is a senior this year involved in slam poetry at Skutt Catholic and spends time with her beloved mule, Shoelace, outside of school. You can email her at [email protected]

1 Comment

One Response to “What You Need to Know About the 2017 Tax Reform Bill”

  1. Chey Miller on December 13th, 2017 11:26 am

    You explained very complicated bills in simple terms that I️ could understand.
    Thank you— great article

    [Reply]

If you want a picture to show with your comment, go get a gravatar.




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What You Need to Know About the 2017 Tax Reform Bill