The GOP Tax Plan: the Good, the Bad, and the Ugly

Yesterday, Congress and the Administration unveiled their framework for tax reform. Here is a list of the good, the bad, and the ugly features of the plan. Keep in mind the framework still has to be turned into legislation, where some of the good provisions could die, and some more bad or ugly provisions could be added.

The Good

1. Ends the death tax

2. Increases the child tax credit and makes it available to more taxpayers

3. Doubles the standard deduction so the first $12,000 earned by someone filing as an individual and the first $24,000 earned by a married couple filing jointly is completely tax-free

4. Ends the “alternative minimum tax” which was created to ensure wealthy taxpayers paid their taxes, but has turned into a trap for middle-and-working class Americans

5. Preserves the charitable deduction

6. Preserves the mortgage interest deduction

7. Lowers taxes on small business income to 25%

8. Allows companies to immediately write-off investment expenses

9. Cuts the corporate rate to 20%

10. Creates a new $500 tax credit for no-child dependents such as grandparents and disabled adults.

11. Maintains research tax deductions for businesses

12. Moves to a territorial tax system that does not punish American companies for selling goods overseas and makes it possible for American companies to invest profits made overseas in America

The Bad

1. Raises the lowest rate from 10% to 12%, although the expanded personal deduction is likely to mean few, if any, taxpayers pay at this rate.

2. Imposes a “global” tax on multinational corporations

The Ugly

1. Leaves open the possibility that an additional higher rate will be added to ensure the “wealthy pay their fair share.” I thought Republicans opposed class warfare and soak the rich tax policy

2. Makes no effort to offset the tax cuts with spending cuts, meaning the final package will either contain tax increases or add to the national debt, thus increasing the inflation tax as the Fed moves to monetize the debt