The House and Senate passed the Tax Cuts and Jobs Act but… There turns out to be one more step: The Senate parliamentarian tossed out several provisions of the conference report that violate arcane budget rules. That means the House will have to vote once more today. President Trump still plans to sign the bill this week. The bill passed in both chambers by strictly partisan votes.
CRFB estimates the bill’s cost, sans gimmicks. The Committee for a Responsible Federal Budget estimates that “if all temporary provisions were made permanent... the conference bill would cost up to $2.2 trillion” over the next decade. Plus interest.
Some TCJA stocking stuffers. NPR notes that the TCJA would leave untouched health savings accounts. The Wall Street Journal shows how some US businesses are thrilled by reduced corporate income tax rates, other accelerated tax cuts, and retention of key tax credits. The bill, they say, is far more generous than expected.
Or gifts for the people who have everything: TCJA Tax Hacks. The New York Times lists a few things taxpayers can do to make the most of the TCJA: Donate to charity now instead of next year. Have children in 2018 or 2019. Hope your very wealthy relatives pass away between 2019 and 2025. Move to a state with low state and local taxes, or just earn a lot more money. Upgrade your private jet. Open a 529 savings account for your kindergartener who attends private or home-based school. Become a pass-through business, or a corporation. Sell your art to your company. Become a tax accountant or lawyer. Or, as International Business Times explains, go into commercial real estate.
Does TCJA violate global trade rules? The European Commission asked Treasury Secretary Mnuchin to remove two TCJA provisions that it says give the US an unfair tax advantage. The troublesome provisions: Taxing a greater share of US export income at 12.5 percent instead of the new corporate rate of 21 percent, and levying a 10 percent tax on cross-border transfers within banks and finance companies. Congress is keeping both, so expect a World Trade Organization battle. The rules would remain in effect until the dispute is settled, probably years from now.
Don’t forget: To avoid a shutdown, add tax extenders! TaxNotes reports that several provisions, including a package of tax extenders, will likely be added to the spending bill that must pass Congress by December 22 to avoid a government shutdown. They include energy-related tax breaks and provisions aimed at Puerto Rico, the Virgin Islands, and American Samoa. The spending bill also will include $81 billion in additional disaster relief.
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