I think it’s safe to assume that Representative Mark Amodei (R-NV2) will be supporting the House Republican version of the Tax Cut Cut Cut… the last three words indicating what will happen for corporations, not what average Nevada income earners can expect from the proposal. USA Today has a preliminary summation of some deductions INDIVIDUALS and FAMILIES won’t be able to use, that increase in the standard deduction is supposed to make up for this? USA Today’s points are listed below, in red font.
Adoption: A tax credit worth up to $13,750 per child would end. It’s a little hard to explain this one, given the GOP “pro-life” stance. It’s even harder to understand when the average cost for an adoption (2012-2013) was $39,996 using an adoption agency and $34,093 for an “independent” adoption. [AmAdopt] Eliminating the tax credit to alleviate the impact of these expenses seems a strange way of encouraging couples to adopt children in need of permanent homes.
Alimony: To eliminate what Ways and Means Committee documents referred to as a “divorce subsidy,” alimony would no longer be deductible by the payor for decrees issued after 2017. Payments would be excluded from the recipient’s income. I’m not at all certain that rebranding alimony as a “divorce subsidy” encourages support for single parents? This would also seem to make it all the more difficult for a parent to make child support payments?
Classroom costs: Teachers could no longer write off the cost of supplies they buy. The reality is that not so long ago school districts kept supplies from pencils to facial tissues on hand; today these items (along with hand sanitizer) end up on lists of items parents are expected to purchase when the school year begins. What isn’t subsidized by parents whose children are enrolled in cash strapped districts is usually purchased by teachers, to the tune of an average of $500 per teacher per year, with some teachers spending much more. [CNN money] It’s been reasonably obvious Republicans aren’t great friends of public school teachers — but this suggestion is a direct slap at teacher’s own bank accounts.
College boosters: Sports fans would no longer be able to deduct 80% of the cost of donations to colleges if they are made only to become eligible to buy seats for games or get preferences such as prime parking spots. The University of Minnesota isn’t sure what will happen to its program in light of this proposal, and universities in Nevada probably aren’t either. UNLV and UNR both use booster donations to support their athletic scholarship funds. Perhaps lost in this controversial proposal is the notion that scholarship funds are, in most cases, not limited to a particular program but also support our “Olympic Sports.” Donors to UNR and UNLV athletic funds might want to ask Representative Amodei why he might be in favor of this Republican plan.
Disaster losses: Currently, losses from theft or events such as flood, fire or tornado that exceed 10% of adjusted gross income are deductible. The bill would repeal that deduction, with one exception — disasters given special treatment by a prior act of Congress. A law enacted Sept. 29 increased the deduction for losses caused by Hurricanes Harvey, Irma and Maria, and it was sponsored by Rep. Kevin Brady, R-Texas. Brady, the chairman of the Ways and Means Committee, is also sponsoring the tax overhaul. How interesting — the plan doesn’t affect those battered by “Harvey” in Texas — but Florida, Puerto Rico, and others it’s YOYO time as far as the Republicans are concerned. Since when do we, as a nation, not give people a break when they’ve lost everything, or nearly everything in a natural disaster?
Employee achievement awards: Complicated rules that allowed some cash awards from employers to be tax-free to the worker would become taxable. Another interesting point — corporations can expect a big tax cuts, but employees earning cash awards from those corporations would be required to pay taxes on these kinds of achievement awards.
Employer-provided housing: Rules allowing for some workers to get housing and meals tax-free from their employers would face a new cap of $50,000, and benefits would be phased out for those earning more than $120,000. So, if the employer has you (and perhaps your family) parked in “West Moose Bay” where groceries have to be flown in, and “housing” is only provided by the corporation — the subsidy is taxable? And we haven’t even mentioned that Section 1310 eliminates moving expenses. (pdf)
Home sale gains: Right now, the gain on the sale of a home is not taxable if it is under $500,000 for joint filers as long as the home was the owner’s primary residence for two of the previous five years. New rules would require a home to be the primary home for five of the past eight years to qualify, and the income exclusion would be phased out for taxpayers with incomes over $500,000. I suppose we can kiss the Bush Administration’s emphasis on home ownership goodbye? Little wonder there’s opposition to this proposal from the housing industry — and from those who construct homes as well. There’s more from USA Today on the topic of housing at this link.
Major medical costs: The decision to eliminate the deduction for medical expenses exceeding 7.5% of adjusted gross income was one of the bill’s “tough calls,” Brady said Friday. “The call is this: Do we want a tax code that has special provisions that you may need once in your life, or do we want a tax code that lowers rates every year of your life?” he said. This may take the prize for lame explanations — ever. Consider for a moment the victims of the Las Vegas shooting, some of whom will be facing major medical expenses exceeding 7.5% of their AGI — not just now but for years to come. The idea that we should eliminate affordable comprehensive health insurance is bad enough, but this notion is downright heinous. And, this from those who want to cut Medicare and Medicaid?
Not to put too fine a point to it, but this bill, which will most likely be supported by Representative Amodei, could have been drafted by accountants and tax lawyers for major corporations and the top 1% of American income owners — to be paid for by those who are working in everyday jobs, who have to move to find employment, who are adoptive parents, who are victims of natural disasters, who are facing major medical expenses…