All is flux, said the great Greek philosopher Heraclitus, and House Republicans seem to be doing their best to prove him right as they struggle to complete their tax bill. Delivery of an initial draft of the legislation was pushed back from Wednesday to Thursday. And while Rep. Diane Black, chair of the House Budget Committee, told Bloomberg that the plan would be released Thursday at 9 a.m., rumors are also floating around that it could be delayed until next week.
The basic problem is that the tax writers have been unable to come to an agreement on many of the details in what is expected to be a 1,000-page piece of legislation. While they continue to work over the fine points of the plan, which could change at any moment in true Heraclitean fashion, there are reports (here, here and here) that some parts are set. Here’s what is reportedly settled in the tax bill, and what is still up in the air:
Important details that seem to be settled:
- Four tax brackets, with the top bracket remaining at 39.6 percent
- The standard deduction is doubled
- A new child tax credit
- The alternative minimum tax is eliminated
- The deduction for state and local income taxes is eliminated, but some kind of deduction for state and local property taxes will remain
- Repeal of the estate tax, phased out or delayed for several years
- A reduction of the corporate tax rate from 35 percent to 20 percent
- A reduced rate for pass-through businesses of 25 percent
- A minimum tax on foreign earnings for U.S. corporations
- More generous rules for writing off capital investments, coupled with new limits on interest deductions for businesses.
And some crucial points that remain in dispute:
- At what income level will the top personal tax bracket of 39.6 percent kick in?
- Will the 20 percent corporate tax rate be phased in?
- Will the costly corporate tax cut be permanent, or will it have to be temporary?
- Will there be changes in the rules for retirement plans – i.e., new limits on tax-free contributions to 401(k) plans?
- What is the value of the child tax credit?
- What limits will there be on the state and local property tax deduction? This is a crucial question for lawmakers from high-tax states such as New York and New Jersey, some of whom have said this could make or break their support for the bill.
- How will high-income earners be prevented from taking advantage of the new pass-through rate?
- What to call the bill: President Trump suggested “The Cut Cut Cut Act” this week, and while his suggestion doesn’t seem to have gained much traction, it does highlight the fact that the bill has no name. The Ways and Means Committee will have the final say, according to ABC News, but as one Hill aide said, “At the end of the day, this will be known as the Trump tax cuts.”
There are no doubt other points of contention, some more important than others, and Politico reports that tensions are running “very high” as negotiations continue. With so many details still unsettled as Republicans look for ways to pay for the more than $5 trillion in tax cuts they want, it’s still unclear precisely who will benefit and how much. And remember, this is just the House version of the bill. The Senate version still to come may offer very different answers to the contentious questions at hand.