This is one of the problems with running a daily newspaper in the Internet age. The Las Vegas paper — which hit the driveways this morning — has a story about what is expected to be in the Republican tax reform bill, but an hour or so later the actual tax bill has been released.
The New York Times is reporting that the much debated and maligned dropping of the income tax deduction for state and local income and sales taxes is still in the bill.
The state and local tax (SALT) deductions are patently unfair to states with lower tax rates.
Using 2010 statistical data from the IRS, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.
Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.
The tax deduction for property taxes remains but is capped at $10,000. The bill also maintains mortgage interest deductions for existing mortgages, but caps the deduction for newly purchased homes to $500,000.
The bill also establishes three tax brackets — 12, 25 and 35 percent. “Single filers making up to $24,000 will pay no income tax; up to $90,000 will be in the 12 percent bracket, up to $260,000 in the 25 percent bracket and up to $1 million in the 35 percent bracket. Those making above $1 million will be in the 39.6 percent bracket, which is currently the top rate for millionaires,” the Times says.
The standard deduction for the 70 percent of Americans who do not itemize would increase from $6,350 for individuals to $12,000 and from $12,700 to $22,000 for married couples.
There will be no changes to 401(K) plan tax exemptions after all.
It also doubles the exemption for the estate tax and repeals it after six years.
Bloomberg is also reporting that the bill ends the $7,500 credit for purchasers of electric vehicles made by companies such as Tesla Motors, which got more than $1 billion in tax breaks from Nevada to build a battery plant in Sparks.
Now the fight begins. Nevada Democrats have largely opposed the tax reforms that would benefit most Nevada taxpayers and stimulate the economy.