The House GOP members came up with a tax bill that aims to “Make America Great Again.”
And while there are a bunch of tax cuts to help companies better compete in the global economy, the brunt of those cuts seems to fall on the middle class. Maybe it’s because no one in Congress is part of the middle of the class any more?
House Speaker Paul Ryan (R-Wis.) claims the typical U.S. family of four will see a $1,182 cut in their taxes, as the House proposal calls for nearly doubling standard exemptions and deductions. But while the GOP is offering big tax cuts for Corporate America, it also proposes to take away some much-needed tax breaks from families.
Here are five big ones:
1. No More Alimony Deduction
Today, the payer gets a deduction for the alimony paid to the ex-spouse, and the recipient is taxed on that amount.
“But the fact that there is alimony means there’s a big disparity in income and tax rates between the two spouses,” says Malcolm Taub, Co-Chair of Davidoff Hutcher & Citron’s Divorce & Family Law group.
And very often, it’s the women who makes less on her own. Removing the alimony deduction, could decrease the amount the payer is willing to fork over since he’d no longer get a big tax break for it.
“The person who will suffer is the non-money spouse,” says Taub.
2. Reduction of the Mortgage Interest Deduction on New Loans
For new purchases only, the mortgage interest deduction is limited to interest on a $500,000 loan, down from the current amount of $1 million. Now while this may sound like a lot of money, if you live in states like New Jersey, New York, Connecticut or California — you know that’s not true. “So basically you’re hitting the blue states,” says Taub.
In addition, the interest deduction for second homes or on lines of credit will go away too, says Mark Luscombe, principal analyst at Wolters Kluwer, a tax and accounting services company.
3. No More State and Local Tax Deduction
The GOP tax reform bill would take away the federal tax deduction for state and local income taxes, but it will allow a property tax deduction of up to $10,000.
So again — if you live in those high tax states that have high property taxes – like New Jersey, New York, Connecticut and California – you’re out of luck.
4. Adoption Credit — Gone
This is super-bonkers, because there are so many kids that need adoption and the process is so expensive.
Not to mention the fact that this smacks the LBGTQ community hard.
5. Moving expenses – Gone, too
So if you have to move to find a job, you can’t deduct those unreimbursed costs anymore.
Granted the lobbyists and tax writers have to get their hands on this and will rip it to shreds. So the final version probably be very different. But why are we hurting the engine of America?
Warren Buffett has said — many times — that raising his taxes on him and his billionaire buddies won’t hurt and will help a ton.
Maybe someone should listen to the Oracle of Omaha again.
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