YOU’LL KEEP MORE OF YOUR MONEY
As Indivisible and MoveOn.org saturate Alaska’s airwaves with #killthebill messages warning of dire consequences if the Senate’s Tax Cuts and Jobs Act passes, a look at the actual impact on Alaskan taxpayers shows they’ll keep more of their income in most tax brackets.
Here’s how the Not One Penny movement describes the tax reform bill:
As President Trump and congressional Republicans push their plans to give massive tax breaks to the rich, progressive groups and grassroots organizations are mobilizing across the country to demand that elected officials provide not one penny in tax cuts for millionaires, billionaires, and wealthy corporations.
The last thing working-class Americans need is a tax code that further rigs the system in favor of corporations or gives another leg up to the top one percent.
+ Trump’s so called ‘tax reform’ plan uses the same trickle-down economics that has left working families and small businesses behind as corporate profits skyrocket and wages stagnate.
+ We should call these efforts what they are: a scheme that will pad the pockets of the wealthy at the expense of working families.
In fact, the Senate tax bill does not increase taxes on Americans at any income level.
The average Alaska individual filer makes over $33,000 a year, and according to calculations from the Tax Foundation, they will see a 3 percent decrease in their IRS tax bill, should the legislation be signed into law.
The median income for joint filers in Alaska is over $73,000, and they, too, will see their tax bills cut by 3 percent.
OTHER PROVISIONS OF THE TAX REFORM BILL
- The child tax credit increases from $1,000 under current law to $2,000, which is more than the original proposal of $1,650.
- The Obamacare individual mandate penalty would be eliminated, meaning there will be no penalty for not purchasing health insurance.
- Graduate tuition waivers are restored. Under current law, students who get a tuition waiver must declare that as income.
BUSINESS TAX PROVISIONS (Source: Tax Foundation.)
- Pass-Through Income: The proposal expands the number of businesses in service industries that claim a special 17.4 percent deduction. Most service industries are disallowed the deduction, but there is an exception for smaller businesses by which they can claim the deduction regardless of industry classification. The new limit would be $500,000 for married filers and $250,000 for individuals, increased from $150,000 and $75,000 respectively in the introduced bill. The Chairman’s Mark makes the bill’s W-2 provisions more generous, and expands it to include sole proprietors. This provision has been opposed by Sen. Ron Johnson, R-Wisc. — his family business would be affected.
- Net Operating Losses: Starting in 2024, net operating loss carry-forwards would be limited to 80 percent of taxable income, down from 90 percent.
- Research and Experimental Expenditures: These expenditures would need to be amortized instead of deducted, starting in 2026.
- Business Tax Trigger: The proposal has a federal tax trigger so that if federal revenues from Oct. 1, 2017, to Sept. 30, 2026, exceed $27.487 trillion by more than $900 billion, several business tax increases would not take effect for the 2026 tax year.
- Reduced Alcohol Excise Taxes: The proposal lowers excise taxes rate on alcoholic beverages.
Clearly, neither the House nor Senate versions of the tax bill represent radical departures from current law. Rather, they make U.S. companies more competitive internationally, improve the tax treatment of many small businesses, and deliver modest reductions in marginal tax rates across the individual income spectrum.
Setting aside the economic illiteracy of the “Not One Penny” movement, both versions hold the promise of accelerating economic growth and rising incomes. We are hopeful that Sen. Murkowski will not be swayed by the recent barrage of left-wing advertising and pressure tactics.