by Barbara Nevins Taylor
Do you lose with the tax cut? It depends how rich you are. Both the House and Senate plans have tax cut winners and losers. The rich do better under both the House and Senate tax plans, according to the non-partisan Tax Policy Center. Its report says, “The largest cuts in dollars and as a percentage of after-tax income would accrue to higher income people.” Researchers also found “. . . not all taxpayers would receive a tax cut under this proposal — at least 7 percent of taxpayers would pay higher taxes under the proposal in 2018, and at least 24 percent of taxpayers would pay more in 2027.”
So who wins and who loses under the plan the House of Representatives passed and the proposals under consideration by the Senate?
You stand to lose if you deduct student loan interest, or tuition and fees. The proposed House plan eliminates those deductions. The Senate plan leaves things the same.
You lose, under the House tax plan, if you deduct out-of-pocket medical expenses. The Senate proposal, for now, leaves things the same.
You lose if you itemize deductions now. Both the House and Senate proposals repeal many itemized deductions.
If you deduct state and local taxes, you may find a big change. Under the House plan you could deduct up to $10,000 of your real estate taxes. But under the Senate plan you couldn’t deduct anything, not your property taxes not state and local income taxes. Nor could you deduct medical expenses or charitable donations.
If you deduct your mortgage interest, the Senate proposal would let you deduct interest on a house loan of up to $1 million. Under the House plan it’s $500,000 for a principle residence. So this hits many people who live in California, New York and New Jersey where real estate prices and taxes are high and many have second homes.
Corporations win as the tax rate would go down from 35 percent to 20 percent under both the House and Senate plans.
You also win if you have an estate valued over over $5.6 million, or twice that for a couple. The top estate tax rate of 40 percent wouldn’t kick in under the House and Senate plans unless your estate is valued at $22.4 million for couples and $11.2 million for individuals.