The main goal of the House's bill was to lower taxes on corporations. The top marginal rate would be lowered from 35 to 20 percent, pass-through corporations (S-Corps aka LLCs) would have a top rate of 25 percent, with a rate of only 9 percent on the first $75,000 (starting in 2022). Despite threats, the House bill does not include a repeal of ACA's individual mandate, although the Senate bill does. Businesses can also repatriate overseas cash assets at a rate of 12 percent. Businesses also will no longer be taxed on revenues earned outside the country. The estate tax is being phased out. According to some analysts, about 40% of American would pay less and 20% would pay more. However, any personal income tax cuts expire in 2023. The number of tax brackets decrease from seven to four. Many credits and deductions are being eliminated, including medical expenses, most college tax benefits, and the personal exemption and replaced with a larger standard deduction.
What I am seeing is that it is unclear exactly how this bill would affect me personally. I do not itemize, so I do not suffer from the loss of deductions. The elimination of personal exemptions for me is an increase of taxable income of $8100, which is more than offset by the doubling of the standard deduction, decreasing my taxable income by about $12,000. However, anyone with a household of more than three is going to lose out with these two changes. Two or less, there is a net benefit. I'm not sure how my business income will be taxed, or if allowable business expenses will change.
Note that the personal reductions expire while the business reductions do not. This is to shoehorn the bill into Senate requirements that the changes net less than a certain amount over a ten year period. The expiration of the personal income tax changes will allow the math to work, but we all know that a future Congress will not want to raise taxes (we've been down this road before), so in reality the costs will exceed the Senate cutoff. Meeting these requirements allows the Senate to pass a bill that is not subject to filibuster and which therefore can be passed with 51 votes (or 50 plus Mike Pence).
Of course the big push is to reduce corporate taxes, allegedly to boost job creation and so that employees can receive raises. In fact, the White House spokesperson Sarah Sanders recently announced that the "average American family" would get a "$4000 raise" from this tax plan, factoring in the ephemeral extra jobs and higher pay rates supposedly on the way. The problem with this is that American corporations, skittish about over-extending since the last recession and housing crash, are sitting on piles of cash that could already be used for investment and increasing wages. In the real world businesses do not create jobs or hand out raises simply because their taxes decrease. Investment, including expansion, happens because there is a greater demand for their product or service; raises happen when there is competition for labor, otherwise companies don't pay any more than they have to.
All in all, this "tax reform" bill appears to be primarily a giveaway for the billionaire class, while being branded as a bonanza for the working Joes and Janes of America.
helpful links:
https://www.washingtonpost.com/news/wonk/wp/2017/11/16/the-house-is-voting-on-its-tax-bill-thursday-heres-what-is-in-it/?utm_term=.447ad9e7f537
https://www.nytimes.com/interactive/2017/11/15/us/politics/every-tax-cut-in-the-house-tax-bill.html
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