The tax bill offers last-minute breaks for developers, banks and the oil industry – tech2.org

The tax bill offers last-minute breaks for developers, banks and the oil industry



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That expansion would cost the government $ 114 billion more than an earlier version of the proposal. The provision would reduce rates for taxpayers simply if their businesses are organized as badociations or other entities whose tax burdens reach the individual. Half of that type of income goes to the top 1 percent of taxpayers, according to the Tax Policy Center. In total, that tax cut will cost the government about $ 476 billion over the next decade.

Not all types of income would be eligible for the recently reduced rate. For example, short-term capital gains, dividends, interest and annuity payments are excluded. But the list of earnings that qualifies was expanded from previous Republican proposals in the Senate.

Investments in mortgages in the hands of real estate investment trusts could take advantage of the lower transfer rate instead of being taxed with ordinary revenues, which are higher.

Thanks to an amendment offered by Senator John Cornyn, Republican of Texas, certain revenues from oil and gas operators, such as Kinder Morgan, may also qualify for the new lower rate. Industry representatives said they would have been excluded from the expected benefits that real estate investment trusts and other publicly traded industries were obtaining.

"The Senate went out of its way to confirm that pbadive investors in these publicly traded investment vehicles benefit from the transfer discount tax rate," said Edward D. Kleinbard, professor of tax law at the University of Southern California and former chief of staff of the Joint Tax Committee of Congress. "This is a working definition of a waste of taxes"

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A provision in the Senate bill to give multinational companies such as Pfizer, Google and Apple a tax exemption on the profits they have accumulated in offshore tax havens it became less generous.

Credit
Christie Hemm Klok for The New York Times

Offshore Fiscal Rest

A provision to give multinational companies like Pfizer, Google and Apple a tax exemption on the profits they have accumulated in offshore tax havens became less generous than previous versions of the proposal. But companies would still carry those gains at rates of 7.5 to 14.5 percent, well below the 35 percent corporate income tax and also lower than the new corporate income tax, which would reduce by almost half to 20 percent. percent. . This break will still save companies approximately half a billion dollars compared to the current law, according to an estimate by the Zion Research Group.

Banks avoid a blow

Banks and other financial institutions can still avoid taxes by making payments to offshore subsidiaries. Lawmakers initially intended to avoid the tax benefits of such actions, but banks obtained a last-minute postponement for some transactions. When calculating the business tax bills, the bill excludes payments related to derivatives, a large source of income for financial institutions.

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The federal tax code includes limits on how much interest companies can deduct from their taxes. But the final bill excludes the interest paid by car dealers from those restrictions.

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Melissa Lyttle for The New York Times

Benefit for car dealers

Some last minute changes were smaller and more peculiar: the federal tax code includes limits on how much interest companies can deduct from their taxes. But the bill now excludes the interest paid by car dealers from those restrictions.

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Alternative Minimum Tax Confusion

The bill extends the so-called bonus depreciation, the ability to make large deductions related to certain corporate investments, at a cost of $ 34 billion, but pays for it by reinstalling the alternative minimum tax corporate. The last-minute decision to eliminate the derogation of the corporate alternative minimum tax left lawyers and accountants scratching their heads about the final impact. Several experts said that it seemed involuntary that the benefit of the tax credit for research and experimentation could be effectively lost. Provision is expensive for many companies.

"Oops," said Mr. Looney of the Brookings Institution. "It's an easy mistake to make in a first pbad, but it would catch if I had more time."

Family leave credit, but not for all

At least one Republican proposal floated for weeks until it became the final bill, but apparently in a way designed to punish taxpayers in democratic states. Senator Deb Fischer, Republican of Nebraska, introduced a credit for employees for paid family and medical leave. However, the final version does not apply to employers in states in which such paid leave is required, or will soon be required, by state law, as in New York, California, New Jersey, and Rhode Island. It also does not apply to employees who earn more than $ 72,000 and will only last until the end of 2019.

"In summary, we have a short-term fertility incentive for low / middle income employees, provided that they do not you live in too blue a state, "wrote Daniel Hemel, a professor of tax law at the University of Chicago.

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People waiting for help with their tax return. The final bill rejected a provision to finance the Internal Revenue Service, so that it could continue to offer advice to low-income taxpayers.

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David McNew / Getty Images

Hits for low-income people

While wealthy investors and businesses would receive numerous tax cuts – including eliminating the estate tax for all but a small fraction of the wealthiest families in the world. country- the Senate moved to tighten deductions for low and middle income wage earners. The bill, for example, prohibits employers from rewarding employees with gift cards so that a reward of, say, $ 25 or $ 50 in the form of a gift card does not escape tax.

At the same time, a provision to fund the IRS so that it could offer advice to low-income taxpayers was rejected in the final bill.

Although the bill extends the one-year child tax credit to those of 17 years, that change ends in late 2024, a year before other individual tax cuts expire, so that families with born children in 2008, you see that the credit ends when your children are still 16 years old.

Subsidy for private and religious schools

In the early hours of Saturday, Vice President Mike Pence issued a tie-breaking vote to approve an amendment that allows people to use up to $ 10,000 a year from 529 savings accounts with tax benefits for private and religious schools and some studies at home. Under current law, 529 accounts can only be used for higher education.

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