Senate Tax Bill - 500 Card Monty – Try to find the quarter!
Congress often boasts that they enact taxes reduction. What they mean is that they reduce tax rates. Taxes are calculated as (i) taxable income (ii) multiplied by the tax rate. If rates are reduced but the calculation of taxable income is changed (i.e. deductions are reduced), well, actual tax paid can still go up.
The Affordable Care Act (ACA) implemented a 3.8% “Net Investment Income Tax” to provide funds to pay for the US government’s support of the heath care insurance “individual mandate.” The Senate version of the 2017 tax legislation (again, the terms of the House and Senate bills need to be reconciled to form the final version of the law) effectively eliminates the individual mandate, yet retains the Net Investment Income Tax, presumably as a way to partially pay for the tax “cuts.” So they get to say they did not enact any “new” tax. Maybe true, in a vacuum, but disingenuous.
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