President Trump said on Saturday before departing to Camp David that he believes the GOP tax plan that is currently on the table in Congress will be great for jobs and the middle class and predicted the U.S. economy could grow up to 4, 5, and maybe even 6 percent if approved.
“Because of what we’ve done with regulation and other things, our economy is doing fantastically well. But it has another big step to go and it can’t take that step unless we do the tax bill” President Trump said on Saturday.
Yesterday the House and Senate Finance Committee released a final version of the GOP inspired Tax Cuts and Jobs Act that overhauls America’s tax plan to deliver deep tax cuts to Americans and corporations which could be voted on in Congress as early as next week.
According to the latest amended version of the Tax Cuts and Jobs Act released yesterday, the U.S. corporate tax rate drops to 21 percent from 35 percent beginning January 1, 2018, marking the largest reduction of the U.S. corporate tax rate in the country’s history.
For main street businesses, the tax rate is reduced to 20 percent that applies to the first 315,000 of joint income earned by all businesses organized as S corporations, partnerships, LLCs, and sole proprietorships.
For businesses above this threshold, the bill generally provides a deduction for up to 20 percent on business profits, lowering their effective marginal tax rate to no more than 29.6 percent.
The corporate alternative minimum tax is eliminated as is the penalty tax within the individual mandate of the Affordable Care Act, requiring all Americans to carry health insurance.
The number of individual tax brackets for tax paying Americans remain at 7 (0%, 10%, 12%, 22%, 24%, 32%, 35%, and 37%) while the standard deduction for individuals roughly doubles.
Concerning the mortgage interest deduction, for all current homeowners with existing mortgages, there will be no change to the current mortgage interest deduction.
For homeowners with new mortgages on a first or second home, the home mortgage interest deduction will be available up to $750,000.
The Child Tax Credit, which was a sticking point for Senator Marco Rubio (R-Florida), now doubles from $1,000 to $ 2,000 while the write off with the cost of state and local taxes has a limit of $ 10,000.
The Child and Dependent Care Tax Credit is maintained as is the Adoption Tax Credit.
Medical expense deductions are also expanded under the Republican tax reform plan.
The medical expense deduction for 2017 and 2018 receives relief with the deduction coming into effect for medical expenses exceeding 7.5 percent of adjusted gross income, and rising to 10 percent beginning in 2019.
The earned income tax credit is maintained and the exemption from the death tax is doubled from the current level.
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