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GOP Tax Plan Could Eliminate Tax Breaks02/27 05:48

   WASHINGTON (AP) -- When Republicans say they want to lower taxes and get rid 
of loopholes to make up the lost revenue, they're talking about eliminating 
some very popular tax breaks enjoyed by millions of people.

   That's why making big changes to tax laws is so hard --- and why it hasn't 
been done for 30 years.

   Unless Congress simply cuts taxes for everyone, there will be winners and 
losers, and the losers won't go quietly. If Congress does cut taxes for 
everyone, lawmakers risk exploding an already large budget deficit.

   Republican leaders in the House and Senate say they don't want a tax 
overhaul to add to the national debt. That's what they mean when they say 
"revenue neutral." The new system would raise the same amount of tax revenue as 
the old one, after taking into account some broader economic effects.

   President Donald Trump has said he will make public a tax proposal in the 
coming weeks. Republicans in Congress are also working on plans, with the House 
GOP taking the lead.

   Last year, House Republicans released a blueprint that would lower income 
tax rates and reduce the number of tax brackets. The gist of the plan is to 
lower tax rates for just about everyone, and make up the lost revenue by 
scaling back exemptions, deductions and credits.

   A look at the biggest tax breaks enjoyed by individuals, along with The 
Associated Press' assessment of how safe they are as Congress works to overhaul 
taxes. All estimates are from the nonpartisan Joint Committee on Taxation, the 
official scorekeeper for Congress.

   ___

   RETIREMENT SAVINGS

   Contributions to pension plans are tax-exempt, including defined benefit 
plans and defined contribution plans, such as 401(k)s. This exemption saved 
taxpayers $180 billion in 2016, making it the biggest tax break for individuals.

   RATING: Safe.

   ___

   EMPLOYER-PROVIDED HEALTH INSURANCE

   Nearly half of all those in the United States get their health insurance 
from an employer. The value of those insurance policies is exempt from 
taxation, saving taxpayers $155 billion in 2016.

   Proposals to start taxing at least some health benefits are dividing House 
Republicans as they struggle to replace President Barack Obama's health law. 
Some see it as another version of Obama's "Cadillac" tax on high-cost health 
insurance, which has been delayed until 2020.

   RATING: In danger.

   ___

   CAPITAL GAINS AND DIVIDENDS

   Investors pay reduced tax rates on long-term capital gains and qualified 
dividends, saving them $131 billion in 2016. The tax rate for investment income 
is 15 percent for most investors, though the very wealthy pay a top rate of 20 
percent. The top tax rate on regular income is 39.6 percent.

   In 1986, President Ronald Reagan raised taxes on investments and used the 
revenue to dramatically reduce tax rates for regular income. Today, few 
Republicans embrace the idea of increasing taxes on investments.

   RATING: Safe, as long as Republicans are in charge.

   ___

   EARNED INCOME CREDIT

   Nearly 30 million families claimed the earned income tax credit in 2016, 
which targets low-income working families with children. They saved a total of 
$73 billion. Republicans like the credit because it rewards work. Democrats 
like it because it is one of the federal government's largest anti-poverty 
programs.

   RATING: Safe, but there could be changes.

   ___

   STATE AND LOCAL TAXES

   More than 43 million families deducted their state and local income, sales 
and personal property taxes from their federal taxable income in 2016. The 
deductions reduced their federal tax bills by nearly $70 billion. More than 90 
percent of taxpayers who itemize take advantage of this deduction. 
Nevertheless, the House Republican blueprint would repeal it to help pay for 
lower tax rates.

   RATING: In danger.

   ___

   MORTGAGE INTEREST

   Nearly 34 million families claimed the mortgage interest deduction in 2016, 
reducing their tax bills by $65 billion. Some economists say the deduction is 
an inefficient way to promote home ownership. But it has strong support among 
home owners and every industry associated with buying and building homes. 
Recognizing the political peril of targeting this deduction, the House GOP 
blueprint would keep it.

   RATING: Safe, but it could get a haircut for high-priced homes.

   ___

   CHARITABLE CONTRIBUTIONS

   Nearly 36 million families claimed deductions for charitable contributions 
in 2016, reducing their tax bills by more than $57 billion. Most tax overhaul 
proposals, including the House GOP blueprint, would spare this deduction.

   RATING: Safe.

   ___

   CHILD TAX CREDIT

   More than 35 million families claimed the $1,000-per-child in 2016. They 
saved more than $54 billion.

   RATING: Safe. Some proposals would increase it.

   ___

   SOCIAL SECURITY AND RAILROAD RETIREMENT

   Most Social Security and railroad retirement benefits are not taxed, saving 
these people $40 billion in 2016. Individuals with a combined income below 
$25,000 do not have to pay taxes on Social Security. The income threshold for 
married couples is $32,000.

   RATING: Safe.

   ___

   PROPERTY TAXES

   Nearly 35 million families deducted their taxes on their home or other real 
estate from their federal taxable income in 2016. They saved a total of $33 
billion. This deduction makes it easier for school districts to raise money 
from property taxes. It is, however, targeted for elimination in the House GOP 
blueprint.


(KA)

 
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