Who wins, who loses

Republicans unveiled their bill to overhaul the U. S. tax code Thursday, and there were some major winners and losers.

Winners

Big corporations. America’s mega businesses are getting a substantial tax reduction. The bill cuts the top rate that large corporations pay from 35 percent to 20 percent, the biggest onetime drop in the big business tax rate ever. On top of that, companies get some newtax breaks to help lower their bills such as allowing businesses to deduct all the costs of purchasing new equipment, aswell as a special low rate on any money they bring back to the United States from low- tax countries such as Ireland. The entire business tax system is also changing from a worldwide system inwhich money anywhere around the globe is taxed to a territorial system in which it’s mostly money made in the U. S. that is taxed. Businesses have long lobbied for this change. tax, often The estate called the “death tax” by its critics, is going away by 2024, meaningwealthy families will be able to pass on lavish estates and trust funds completely tax free. The mega wealthy also get to keep charitable deductions, a popular way to lower their tax bills, and they no longer have to pay the alternative minimum tax.

The bill eliminates the Alternative Minimum Tax, which forces people who earn more than about $ 130,000 to calculate their taxes twice, once with all the deductions they can find and the AMT method, which prevents most tax breaks. The AMT was created in 1969 to prevent the rich from excessive tax dodging. There is perhaps no better example of how much this will benefit the rich than that fact that Trump himself would have paid $ 31 millions less in taxes in 2005 ( the one year for which we have his tax returns) without the AMT.

Many wealthy Americans hedge fund managers, doctors, lawyers and consultants will get a sizable discount on their taxes. The top individual tax rate is 39.6 percent, but under the GOP bill, high earning small business owners will only pay a tax rate of 25 percent on 30 percent of their business income.

Losers

The National Federation of Independent Business, which represents 325,000 small businesses, said it would not support the GOP bill because it “leaves too many small businesses behind.” The original idea was to lower small businesses taxes to 25 percent, but the actual language in the bill only allows small business owners to pay 30 percent of their business income at the 25 percent rate. The restwould be paid at the business owner’s individual tax rate. Any individual earning over $ 200,000 a year ( or couples earning more than $ 260,000) would pay the rest of their taxes at a rate of 35 percent. of the state and local tax deduction. Over a third of filers in many Democratic states like California, New York, New Jersey and Connecticut claim the the deduction on their returns. Under the GOP plan, people will still be able to deduct up to $ 10,000 on the property taxes they pay locally, but they will no longer be able to deduct the other taxes they pay to state or local governments from their federal tax payments. While the bill includes lots of tax breaks for big businesses and the rich, the bottom 35 percent of Americans do not get any extra benefits, according to Lily Batchelder, who served on President Barack Obama’s National Economic Council. The GOP preserves the Earned Income Tax Credit, a popular refundable credit for the working class, but the bill does not expand it.

Charities. The National Council of Nonprofits warns that charitable deductions are likely to go down. While the GOP enables thewealthy to continue deducting their charitable giving, many middle and upper middle class families will no longer get that tax break because they probably will stop itemizing their deductions. The GOP argues that middle class people should end up giving more to charity since they will pay less in taxes.