Written by Stephen Garcia.
Early morning on Dec. 20, Republicans in Congress were able to pass their tax bill after weeks of negotiating and dealing with minor issues in the the technical details.
According to CNBC, president Donald Trump signed the bill into law on Dec. 22 along with an emergency funding bill to keep the federal government running through Jan. 19.
This tax bill will enact a large number of cuts across the nation and will go into effect Jan. 1, 2018. The cuts will apply to the taxes everyone will file in 2018.
Fox News reported that multiple GOP congress members have promised this tax bill will increase revenue in the country and Trump promised the rich would not prosper under the new tax code. However, a number of individuals and organizations say otherwise, including the Congressional Budget Office.
The CBO, which was put in place in 1975, is, according to its website, a “strictly nonpartisan; conducts objective, impartial analysis; and hires its employees solely on the basis of professional competence without regard to political affiliation.”
The CBO put out a report on the GOP tax bill explaining how the tax bill would not live up to what was promised, noting that the bill will reduce billions of dollars in revenue between 2018-2027. Snopes also reported the bill would add more than $1 trillion dollars to the deficits over the next 10 years.
CNN reports the new bill offers cuts to people and corporations. Tax cuts for corporations are permanent and tax cuts for individuals are only temporary. Snopes reported tax cuts for individuals will expire after 2025.
According to a joint statement released by the House and the Senate, the bill keeps the seven tax brackets but changes them. The current tax brackets are listed below:
Under the GOP plan the new brackets are:
CNBC reported that individuals who live in states with state, local, property, sales and real estate taxes, will no longer be able to deduct all of these from their federal taxes. They will only be able to deduct $10,000 regardless of whether they are single or married.
According to CNN, the bill doubles the standard deduction for both single and joint filers from $6,350 to $12,000 and $12,700 to $24,000 respectively. The plan also eliminates the personal exemption. Before the law is put into effect, individuals can claim a $4,050 personal exemption for themselves, their spouse and each of their dependents. Under the new plan, they will no longer be able to.
CNBC reported the child tax credit is raised to $2,000 for children under 17. The income threshold is raised as well under this new plan to single parents making $200,000 from $75,000 and married couples making $400,000 from $110,000. This tax credit expires in 2025.
The new bill also eliminates the mandate to buy health insurance. Individuals without health insurance will no longer be penalized for not buying health insurance.
As stated before, the tax cuts for individuals are only temporary. Forbes informed by 2019 people making $30,000 or less would start seeing an increase in their taxes to more than what they were paying before this bill was passed and by 2020 people making $40,000 would see an increase in their taxes. The tax rates of these households will continue to increase as time goes on.
Politifact reported that by 2027 households making less than $75,000 will see a tax increase while households above the $75,000 bracket will continue to see a cut in their taxes.