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Pass-Through Filers Do Better Than Wage Earners In Senate Tax Bill


Under the Senate-passed tax bill, people with pass-through income would see bigger increases in their after-tax income in 2019 than people paying taxes only on wages and salaries, according to a Tax Policy Center analysis. Generally, the wealthier a filer with pass-through income is, the better off they are under the bill.

The Senate bill allowed pass-throughs to deduct 23 percent of business income, whereas the conference report will likely lower this to 20 percent while also lowering the top individual income rate. While this is unlikely to drastically reshape the findings of the TPC analysis, the fact that analysts can’t keep up with the GOP’s speed in writing and passing updated tax legislation underlines how much we still don’t know about the bill’s impact.

The tax rates that U.S. companies would pay on an estimated $3.1 trillion in earnings they’ve stockpiled overseas haven’t been finalized yet — and they may change depending on the final bill’s revenue score, said Representative Tom Reed, a Republican member of the House Ways and Means Committee.

The House voted last month to tax companies’ stockpiled offshore earnings at 14 percent for income held as cash, and 7 percent for less-liquid assets. The Senate’s bill this month set those rates at 14.5 and 7.5 respectively.


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