Saturday, November 4, 2017

Suddenly a little less certain

The GOP unveiled its tax bill this week.  Below are a collection of links to commentary that I found interesting (taking a page from Stefan’s book, some are in the form of embedded tweets):

A lot to like and a lot to dislike in the Republican tax bill: “The tax bill aggressively takes on deductions in the individual income tax code, and channels the proceeds towards across-the-board cuts in income tax.  Unfortunately, that good work is undone by expensive giveaways to the owners of firms, and unnecessary windfalls to the heirs of the rich.”

Tax Bill May Deal a Body Blow to LBOs: “The legislation includes a provision that would cap interest deductibility at 30 percent of adjusted taxable income, a dramatic shift from the 100 percent allowed now.”

Sports Stadiums Would Lose Access to Tax-Exempt Bonds Under House Tax Plan: “Lawmakers of both parties have long sought to limit the use of municipal bonds to benefit sports teams.”

Apple Among Giants Due for Foreign Tax Bill Under House Plan: “Earnings held in cash would be taxed at 12 percent while profits invested in less liquid assets like factories and equipment face a 5 percent rate.”

Proposal Aims to Eliminate Tax Break Linked to Performance-Based Pay for Executives: “The proposed changes would eliminate the tax break linked to performance-based pay for senior executives, raising some $9.3 billion in additional tax revenue over the next decade...”

Republican Tax Plan May Leave Future of Stock Options in Flux: “Under the GOP’s bill, option owners would be required to pay income taxes immediately when the contracts can be used to buy shares, instead of when they are actually purchased.”

US tax reform will boost innovation and entrepreneurship: “We will defer the tax on private stock gains until employees can actually realise those gains by selling the stock, or at least give them a reasonable amount of time to pay the tax bill.”

The GOP tax plan has a tiny 'bubble tax' that could end up raising taxes on the rich: “Every dollar after $1 million of income for an individual or $1.2 million for a couple would incur a surcharge. It would add $6 in taxes for every $100 of taxable income earned above those thresholds — essentially, an extra 6% tax.”

Senate Democrats falsely claim GOP tax plan will raise taxes for most working-class families: “The original report referred to 8 million households receiving a $794 tax increase. Somehow, when it got communicated down the line, that nuance was lost and it was translated into a talking point referring to all working-class families.”

How a Tax Cut Turns Into a Tax Increase: “In rolling out their plan, House Republicans focused on an example family — a married couple making $59,000 per year and with two kids. They said that family would get a tax cut of over $1,182 in 2018 (compared to what they paid in 2017). But, what they didn’t say is that a family making $59,000 would face a tax increase by 2024 relative to current law, with the tax increase potentially rising to nearly $500 by 2027.”

Republicans Bank on Future Congresses to Keep Family Tax Credit: “Taxpayers shouldn’t worry, Republicans say, because future Congresses will prevent the tax credit from vanishing.  ... Rep. Carlos Curbelo (R., Fla.), said he thought members of both parties would ultimately support extending the break. 'That family credit is de facto permanent and you can take that to the bank,' Mr. Curbelo said.”

The GOP Tax Plan and Divorce: “The summary estimates that eliminating the deductibility of alimony payments will increase revenues by $8.3 billion over ten years.”

Republican Tax Proposal Gets Failing Grade From Higher-Ed Group: “In broad terms, the bill would eliminate or consolidate a number of tax deductions meant to offset the costs of higher education for individuals and companies, including the Lifetime Learning Credit, which provides a tax deduction of up to $2,000 for tuition, a credit for student-loan interest, and a $5,250 corporate deduction for education-assistance plans.  The bill proposes new taxes on some private-college endowments and on compensation for the highest-paid employees at nonprofit organizations, including colleges and nonprofit academic hospitals. The plan would also tax the tuition waivers that many graduate students receive when they work as teaching assistants or researchers. Perhaps most significant, the bill would result in many fewer people itemizing their deductions for charitable gifts.”

Teachers spend nearly $1,000 a year on supplies. Under the GOP tax bill, they will no longer get a tax deduction: “Unlike other professionals, teachers are regularly expected to furnish their own supplies. They are often filling in gaps where students are unable to afford supplies — and where districts are unable to furnish them.”

House tax plan allows unborn children to have college savings accounts: “The tax-advantaged accounts, called 529s, help people save for future college expenses. Anyone -- a relative, a friend, or yourself -- can be named as a beneficiary at the time the account is opened. The House legislation unveiled Thursday would allow unborn children to be named as a beneficiary as well. It defined an unborn child as a 'child in utero' and further as 'a member of the species homo sapiens, at any stage of development, who is carried in the womb.'”

Why top tax writer Rep. Kevin Brady, father of two adopted kids, didn’t protect the adoption tax break: “Brady defended the decision to cut the adoption tax credit by pointing out that some families can't claim the credit because they don't pay enough in taxes or they don't itemize their tax bill.”

The Johnson Amendment Under GOP Plan: “The main concern of the repeal of the Johnson Amendment is churches will effectively turn into giant super PACs.” 

Homebuilders tank as the GOP's tax plan caps a big benefit for homeowners: “the tax plan caps the mortgage-interest deduction, which subtracts interest payments from homeowners' taxable income, on new homes at $500,000.”

And, umm, an outraged twitter thread with associated R-language is here, but I will not embed it because this is a family blog.

http://lawprofessors.typepad.com/business_law/2017/11/suddenly-a-little-less-certain.html

Ann Lipton | Permalink

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