By now, you’ve probably heard that House Republicans are expected to release their tax reform bill sometime next week.
It’s been a long road from the Republican platform and the White House to the Republican House, and it’s still far from a done deal.
So how do you know if the Republican tax plan is on track to pass Congress?
Let’s look at what the plan is, and what it might mean for the economy.
What we know So far, there are four major tax changes the House GOP plans to include in the plan: The plan would allow individuals and businesses to deduct their state and local taxes from their federal income taxes, up to $10,000 per individual.
A deduction of $5,000 is allowed for any item of income above that threshold, which is set to be $12,000 for individuals and $24,000 in 2018 for married couples filing jointly.
The deduction would apply to all income over that threshold.
The plan also includes a credit of up to 3.8% for qualifying taxpayers with incomes above $200,000, and the credit would be reduced to 1.8%.
The plan calls for a “closer alignment” between state and federal income tax rates, and would apply only to individuals who make $200k a year.
A small number of taxpayers would be allowed to deduct as much as $2,500 of state and state income taxes.
The bill also would eliminate the estate tax, which would go away by 2027.
It also repeals the alternative minimum tax and the Alternative Minimum Tax Credit.
Finally, the plan would extend the mortgage interest deduction, which currently costs $750 per year.
It would be repealed for taxpayers with income over $1 million per year, and there would be a $50 credit for taxpayers making $10 million or more.
How it’s being marketed The House GOP has been marketing the plan as a way to provide relief for low-income families.
But the Republican plan would do more than just give them a tax break.
It aims to increase the tax burden for working families, particularly those with children.
The proposal would repeal the estate taxes and the alternative maximum tax credit, and add $10.5 trillion in new revenue over a decade.
The House plan would also lower the top tax rate from 39.6% to 35%, eliminate the alternative Minimum Tax, and lower the corporate tax rate to 15%.
These are all things that would hurt the rich, according to the Congressional Budget Office, and are estimated to have a net effect on the economy that would be $1.6 trillion higher than under the House plan.
The CBO estimates that the tax cut would add about $4,700 per family in taxable income to their tax bill.
That’s roughly half the cost of the plan.
And the Republican party has already indicated that it’s not interested in increasing taxes for low earners.
A GOP spokesperson told CNN that the GOP plan would provide a tax cut to working families with higher incomes, and that it would help the middle class.
“This plan is designed to bring our country together, not to benefit those at the very top of our society,” the spokesperson said.
The Republican plan also promises to provide additional tax relief for individuals who earn $1,000 or less, and is projected to add about 2.8 million more people to the tax rolls over the next decade.
How much will it cost?
The GOP’s plan is expected to cost about $1 trillion over the long run, according with the Congressional Research Service.
It will add $2 trillion to the deficit and $1 billion to the debt over the decade, according the nonpartisan Tax Policy Center.
The Tax Policy Centre projects that the plan will add about 14 million people to taxes in 2026 and add about 15 million to the federal debt by 2028.
So the Republican plans tax plan would add roughly $4 trillion to our debt over a full decade, which isn’t insignificant.
How does it add to the economy?
While the Republican’s plan does offer some relief for working Americans, the overall effect of the tax plan will likely be to add to income inequality.
As Vox noted earlier this month, a study from the Tax Policy Institute found that the $1-trillion tax cut will add an average of about 0.5% to GDP growth between 2019 and 2026, but will have a negative effect on overall economic growth.
The tax cut’s net effect will be to make life worse for millions of people who currently have enough money to get by on a regular basis.
How about the middle-class impact?
It’s possible that the overall economic impact of the GOP tax plan won’t be as big as it might seem.
The nonpartisan Congressional Budget Analytics projects that eliminating the estate and alternative minimum taxes would boost economic growth by about 1% in 2021 and 2019, respectively.
But it projects that tax cuts will boost GDP growth by 2% in 2020 and 1.5%-3