Revised Tax Bill Would Put People in Higher Brackets SoonerBy and
Inflation tweak would take effect in 2018 instead of 2023
Revision helps to reduce tax bill deficit to $1.41 trillion
The updated House Republican tax bill released Friday raises income tax thresholds at a different pace starting in 2018, a move that would push Americans into higher tax brackets more quickly than the current formula.
The original version of the legislation would have made the change effective in 2023. Currently, the income levels for each bracket threshold are indexed annually based on increases in the consumer price index.
The bill calls for a switch to a rule known as chained CPI -- which generally results in a lower estimate of annual inflation. Using it in the tax code means that bracket thresholds would increase more slowly compared to wage increases, resulting in more income falling into higher brackets.
On Friday, House Ways and Means Chairman Kevin Brady issued his chairman’s mark -- a revised version of the bill -- featuring some technical changes, including the faster switch to chained CPI. The revision helps to reduce the deficit created by the overall plan to $1.41 trillion from an earlier estimate of $1.49 trillion, according to the Joint Committee on Taxation. Individual tax changes in the bill would have a net cost of $848 billion instead of $929 billion over 10 years, JCT said.
The House tax bill consolidates the income tax rates from seven to four, while setting a $24,000 standard deduction for joint filers and keeping the current top bracket of 39.6 percent. The initial tax brackets for married taxpayers filing jointly are:
- 12 percent: $24,000 to $90,000
- 25 percent: $90,000 to $260,000
- 35 percent: $260,000 to $1 million
- 39.6 percent: $1 million and up
“At the start of our markup on Monday, I will also offer an additional amendment making more substantive improvements to the bill,” Brady said in a statement.
The markup is scheduled to begin Monday at noon and will conclude on Thursday, Brady said. He promised “four days of open full-throated debate.”
— With assistance by Kaustuv Basu