High stakes

20 December 2017 By Gina Chon Follow @GinaChon

Republican lawmakers have passed revised tax cuts that give even more breaks to companies and the wealthy. They are banking on those benefits trickling down to average workers. It could come back to haunt them. Breakingviews notes a few ways to measure the policy’s success.

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The U.S. House of Representatives on Dec. 20 approved the tax-cut plan devised by the administration of President Donald Trump and the congressional Republican party. The upper chamber approved the proposal, which had been amended since its last passage by the House, early in the morning on Dec. 20.

The two sides of Congress settled on a corporate tax-rate cut from 35 percent to 21 percent, which would become effective in 2018 instead of 2019. It also would expand the $10,000 cap on offsetting state and local taxes, as well as sales and property taxes, against federal income tax. The alternative minimum tax for corporations, a provision aimed at limiting the use of tax breaks, would also be eliminated.

The top rate for individual income tax would move from 39.6 percent to 37 percent, and tax cuts for all personal income rates would end at the end of 2025. Deductions for business income coming from so-called pass-throughs, such as partnerships and limited-liability companies, was revised from 23 percent to 20 percent. The child tax credit would be increased to $2,000, with the refundable portion bumped up from $1,000 to $1,400.

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