@GOP Reach a Tax Deal, Decide to Cut Rates Even More for Millionaires and Raise it on the Middle Cla [View all]

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Republicans Reach a Tax Deal, Decide to Cut Rates Even More for Millionaires and Raise it on the Middle Class

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Republicans Reach a Tax Deal, Decide to Cut Rates Even Further for the Rich
By Jordan Weissmann
Dec. 13, 2017, 3:23 PM




US President Donald Trump speaks about tax reform legislation during a lunch with lawmakers working on the tax reform conference committee, including Senator Orrin Hatch (R), Republican of Utah, and Representative Kevin Brady (L), Republican of Texas, in the Cabinet Room at the White House in Washington, DC, December 13, 2017. / AFP PHOTO / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
The guy in the center is definitely getting a tax cut.
SAUL LOEB/Getty Images

Republicans in the House and Senate say that they have reached a deal on a final tax bill, which would cut the rate for the richest Americans more deeply than either chamber had originally planned.

For the past week, members of the Republican conference committee have been working to reconcile the tax packages passed by each house of Congress, with the hope of voting on a final bill before Christmas. The compromise reached today would drop the top individual income tax rate to 37 percent, from the current 39.6 percent. (The original House bill would have left the number unchanged, while the Senate version only lowered it to 38.5 percent.) However, more taxpayers will also be required to pay the top rate than under either the House or Senate bills, which had only applied it to families making at least $1 million. In short, millionaires win, and people who make high six-figures lose by getting kicked up to the highest bracket.

The bigger cut for high earners appears to be aimed at placating wealthy blue state Republicans, particularly on Wall Street, who have worried that the legislation could leave them paying more to the IRS by limiting their ability to deduct state and local taxes. According to the Washington Post, some of Donald Trump’s New York friends had been lobbying the president directly about their concerns.

The conference bill would also let Americans subtract more of their state and local taxes from their federal returns. Under the new plan, the Times reports, taxpayers will be allowed to deduct up to a combined $10,000 worth of property taxes and either income or sales tax. The previous bills only allowed households to keep deducting property taxes. A conflicting story by Politico seemed to suggest that the new bill will require households to choose between deducting their property or income taxes. If the Times is right, though, this is a win for residents of pretty much any state with a high income tax, and especially California, where property taxes tend to be low.