It could happen. Or not. President Trump told reporters that the government could shut down tomorrow given Democrats’ demands. But Trump’s biggest sales job may need to be with House Republicans. The Freedom Caucus and Speaker Ryan are moving closer to a short-term spending bill to keep the government open until December 22—but they’re still trying to figure out how to keep the government open after that. Despite Trump’s warnings, Hill Democrats and Republicans seem to be trying to resolve sticking points such as the immigration status of students and other young people whose parents are undocumented.
TCJA passage: “Almost certain” it’s going to happen. Senate Majority Leader Mitch McConnell is pretty confident about passing the Tax Cuts And Jobs Act. He told Hugh Hewitt yesterday, "Well, almost certain. I mean, I can’t imagine having come this far we’re not going to finish the job.” The TCJA goes to conference committee, now that the Senate and House have both voted to do so. Trump, for his part, expects a conference agreement that “is perfecto” on his desk soon.
Also certain: Less than .001 of estates would pay tax under the TCJA. TPC estimates that the number of high-value estates subject to the federal estate tax would fall from about 5,500 to about 1,700. TPC’s Howard Gleckman explains that those high-value estates would pay about $13.6 billion in estate tax next year, down from $20.4 billion under current law. The bill would roughly double the exemption to over $11 million for singles and more than $20 million for couples.
The new individual AMT. The Alternative Minimum Tax currently hits relatively high-income households who have lots of kids and live in high-tax states. TPC’s Len Burman and Joe Rosenberg write that while the Senate version of the TCJA keeps the tax, it would fundamentally change its character. The new AMT would mostly undo the Senate’s individual income tax rate cuts. And “all married couples with ordinary income between $290,000 and $765,000 would owe AMT even if they only claimed the standard deduction.”
Repeal the ACA individual mandate? Sure. House Ways & Means Chair Kevin Brady told CNBC that the GOP would likely support repeal of the individual mandate to purchase insurance under the Affordable Care Act.
But Congress still has to work out a few other kinks, like the SALT deduction. As for the TCJA’s treatment of state and local taxes, McConnell says he’s open to expanding the tax deduction to include some share of state and local income taxes. Still unknown: How Congress would pay for an expansion.
And the corporate AMT: A coal company CEO is really mad. The Senate’s TCJA would preserve the corporate alternative minimum tax and set a new limit on deducting interest payments. That could raise Murray Energy’s tax bill by $60 million per year. CEO Robert Murray has been a steadfast backer of the President given Trump’s stated support of the coal industry. But for how long?
Meanwhile: How would the House TCJA affect a taxpayer’s bottom line? The Wall Street Journal uses a simplified version of the Penn Wharton Budget Model to create a calculator that estimates tax liability for 2018 through 2027. The calculator does not take into account earnings from capital gains or dividends.
And how could the TCJA affect one extended family in the midwest? The Tax Hound returns, wishing she had spent a little time talking about the tax bills with her parents and siblings. The bills will affect four households very differently, given their varying sizes and sources of income.
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