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$1,182 for Your Family? Here's How New GOP Tax Cuts Could Affect You

Capitol Hill AS
Capitol Hill AS

House Republicans trumpeted their tax reform plan Thursday morning as a win for middle-class families and those living paycheck to paycheck.

Leaders promised that the average family of four making $59,000 a year would see tax relief of $1,182 a year.

The simplified code compresses the number of individual income tax brackets from seven to four, slashes the corporate tax rate from 35 percent to 20 percent and repeals the "death tax" – taxes on larger estates – entirely after six years.

During the GOP event rolling out the House bill, Rep. Kristi Noem, R-S.D. talked about growing up on a farm, and the government socking her family with a huge "estate tax" when her father died. She says while they had assets, they had no money in the bank, and it took them 10 years to pay off the death tax.

READ: The 5 Biggest Reasons to Hate the IRS Tax Code

Meanwhile, GOP leaders say the new plan would so simplify the tax code that most people would be able to file their taxes on a postcard style form.

House Speaker Paul Ryan said political will to pass it is strong. "The world is passing this country by and we're losing jobs and companies as a result of it," he said at a morning press conference. "We've got to modernize our tax code so that we can be competitive again."

There's other politics at work, of course. Republicans need a legislative win and they need it before next year's mid-term elections.

GOP leadership is touting lots of great numbers in connection with the tax bill, but they're not mentioning one fiscal downside: one estimate predicts the proposed plan would add $1.5 trillion to the national debt over the next decade. America's current national debt tops $20 trillion.

Supporters of the bill say they can make up the new deficit by kickstarting robust economic growth that will create more jobs and bring more companies back to the US which will then end up paying taxes to the US that they were previously paying in other countries.

Here's what the new plan does on paper:

* Nearly doubles the standard deduction for individuals to $12,000
* Nearly doubles the standard deduction for couples to $24,000
* Increases the per-child tax credit from $1,000 to $1,600
* Adds a $300 tax credit for each adult in a family
* Cuts the top corporate rate from 35% to 20%

House Republicans are emphasizing that the president stands with them in support of the plan. President Trump has called it the "best Christmas present of all" and GOP leaders said again today that they'd like to have a bill to the president's desk by the end of the year.

Whether that ambitious timeline is possible is still unclear as the Senate appears intent on writing its own plan.

The plan as it stands does not touch the existing rules on 401(k) retirement accounts.

It does limit the widely used deduction for mortgage interest for new home loans to $500,000 or less, a sharp drop from the current $1 million cap.



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