Tax Reform Framework

[ajm184]

The interesting thing imo will be specifically about the mortgage interest deduction and the interplay with the doubling of the standard deduction.  Where I live, the 'average' home is in the 150k range and under this assumption, it won't make sense to itemize mortgage interest.  If you live in NYC, SF, Seattle or other HCOL cities the dynamic can change given the 'average' home price would be higher.  With the lose of the federal deductions for state/local income taxes paid and property taxes, the folks in HCOL areas are going to be see their all-in taxation amount paid increase.

[Craigy]

I think homeowners comprise most of Trump's voter base.  And yeah, "home ownership" is pretty untouchable.

With standard deduction doubling, eliminating state income tax break and other unknown itemized deductions, seems like a lot more people will be taking the standard deduction.  It looks very generous to double the standard deduction, but they're essentially rolling the personal exemptions into the standard deduction, so they're giving with one hand and taking with the other.

Everything hinges on where those brackets fall.  For people like us on WCI, could mean a big win, a big lose, or a wash.

[q-school]

i feel like the mortgage interest deduction is the third rail of politics.  i could be wrong.

i believe it doesn't exist in canada and hasn't seemed to affect ownership decisions.  certainly most could survive without it but they hate to break promises.

i'm really interested in where the proposed brackets would be set

 

[ajm184]

Agree, not a lot of meat to chew on at this point, but that is the point with all the 'special interests' trying to insure their deduction/tax exemption remains in place.

a.  Somewhat surprised the mortgage interest deduction wasn't axed.  Perhaps they will significantly reduce the allowable amount.

b.  Appears the best work is being done on the business side for multi-nationals by the total expensing of capital equipment (should provide a ST boost), a glidepath for overseas earnings to be repatriated (medium term) and the removal of territorial tax shopping incentives (long term).

c. Didn't see anything specific on State deductions, but would love to see this go away so folks get an unvarnished look to compare what they for versus what the get in value from state/local taxing authority's.

[Craigy]

Hot off the presses.

https://www.wsj.com/public/resources/documents/TaxFramework20170927.pdf

 

Still pretty vague.  Down to "three" brackets:  12%, 25%, 35%.  Could help or hurt docs, unclear where the brackets will be, and the mysterious 4th bracket:

"An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code
is at least as progressive as the existing tax code and does not shift the tax burden from high-income to
lower- and middle-income taxpayers. "

Mortgage interest and charitable deductions still available.  State income tax deduction probably going away.

20% corporate rate, maximum 25% rate on other small businesses.

We'll see if congress gets anywhere with this.