Eh, What's Up With These Tax Cuts, Doc? A Hare-Raising Look at the New House Plans!

Of Course There's a Tax Cut for High Earners

What's up doc? It appears the House Ways and Means Committee is keepin' those 2017 tax cuts for the big shots including that lower top rate of 37%. Seems that Trump's idea to jack up the rate for those makin' over $2.5 million is gonna take a snooze. 'Ain't I a stinker?' Wait did I say that out loud? Anyway the big shots are getting some goodies permanent increase in the deduction for pass through income. The effective top tax rate is looking like it's going to be around 28.5% compared with the top individual rate of 37%.

The Old SALT Caper!

Now about this SALT business (State and Local Tax Deductions)... They're thinking about raising the cap from $10,000 to $30,000 but hold your horses! It's only for those makin' $400,000 or less. 'What a maroon!' Those makin' above that? The cap starts shrinkin' back down to $10,000. Talk about a carrot on a stick!

Estate Tax Shenanigans!

Now here's where things get really interesting doc. Currently estates worth up to $13.99 million (or couples with estates of up to $27.98 million) are safe from the estate tax. But these guys are proposing to raise that exemption to $15 million make it permanent and indexed for inflation meaning it will keep rising over time. This will eliminate uncertainty in tax planning. Sounds like someone's tryin' to pull a fast one eh?

Gifting Games for the Wealthy

Wealthy parents will now pause their family giving knowing that the new exemption will be harder to change. Attorneys say wealthy parents will pause their family giving knowing that the new exemption will be harder to change. Those wealthy families thought they were gifting millions of dollars to their kids to take advantage of the exemption (which also applies to the gift tax). Now attorneys say wealthy parents will pause their family giving knowing that the new exemption will be harder to change

The Sneaky Tax Hike!

But wait there's a twist! (Of course there is or this wouldn't be a cartoon.) This proposal also comes with a tax hike for those high earners who love to itemize their deductions. We're talking about charity mortgage interest and all that jazz. They're gonna limit the benefits through some complicated formula. A tax expert mentioned these top taxpayers will only get a deduction benefit of 35 cents for every dollar rather than 37 cents. "Eh close enough!" says no one ever.

Private Foundation Fiasco!

And last but not least there's a proposed tax on private foundations! We're talkin' 5% on the investments of foundations with assets of $250 million to $1 billion and 2.8% for those with between $50 million and $250 million. Now that is a diabolical plan! Tax advisors and nonprofits are saying that this will reduce funds going to charity. Sounds like they're tryin' to cut the legs out from under the private foundation sector.