What's in the tax bill? If you live in California, you better take a look at this.

"Today is the day. We are introducing legislation that will cut your taxes & make the entire system more simple. This will be a game-changer," Speaker Paul Ryan, R-Wis., said on Twitter.
Really! All nonsense. Please take the time to understand that it certainly will not make the system more simple; but more importantly, it is not going to be a tax cut for most families with dual incomes. Don't get sold on what sounds good but really is meaningless. For example, doubling of the standard deduction. Sounds great until you understand that they are taking away the personal exemption. Today you're allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. The House bill eliminates that option. So for a married couple with two children, don't start celebrating that your standard deduction just doubled from $12,000 to $24,000, because you just lost the personal exemptions of 4 x $4,050 = $16,200

If you live in California like I do, the proposed tax reform is even worse due to our high state income tax and higher average home prices than most of the nation. The good news may end up being that like most proposals coming from the Trump Administration, the tax reform proposal will most likely not receive the support needed to pass.
As a California resident, what disturbs me is the cap on property tax deductions, mortgage interest deductions, the elimination of the personal exemption and the deduction of state income taxes on your federal tax return.  Rather than reiterate what is already published, let's just examine the last item in my list - state tax deduction. Think about it! By removing this deduction from your federal tax return, you are paying taxes on "phantom income" or paying taxes on a tax. Yes it is true you earned the taxable income; but you never receive it as it goes to the Franchise Tax Board and with the new proposal, you will have to pay taxes on that again to the Federal government.
Mathematical examples make it easier to understand. Let's say that a married couple with two incomes has a combined annual income of $150,000 and pays state income taxes of $10,000. Currently, this puts this family in the 25% federal tax bracket. Consequently, the proposed changes translate into a tax increase of $10,000 x .25 = $2,500. Guess who doesn't care about this disguised tax hike? 
States with no income tax:
  • Alaska.
  • Florida.
  • Nevada.
  • South Dakota.
  • Texas.
  • Washington.
  • Wyoming.

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The rest of the information below I took from an article published on Yahoo finance.
The proposal would leave intact the existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-deferred. But the plan would limit the widely used deduction for mortgage interest to new home loans of $500,000 or less, a sharp reduction from the current $1 million cap.
The plan also would limit the deductibility of local property taxes to $10,000 and eliminate the deduction for state income taxes, which has generated significant opposition from Republicans in high-tax states such as New York and New Jersey.
The tax-writing Ways and Means Committee will work on finalizing the proposal next week, and the GOP's ambitious timetable to get a bill to Trump by Christmas faces numerous roadblocks. The proposal caused anxiety for some House Republicans and drew criticism from a few in the Senate, which is intent on writing its own bill.
Rep. Lee Zeldin, R-N.Y., announced his opposition: "We need to fix this."
The plan would shrink the number of tax brackets from seven to three, with respective rates of 12 percent, 25 percent, 35 percent and 39.6 percent. The tax system would be simplified, and most people would be able to file their returns on a postcard-sized form.
The plan would set a 25 percent tax rate starting at $90,000 for married couples, with a 35 percent rate beginning to bite at $260,000 — which means many upper-income families whose top rate now is 33 percent would face higher taxes. Individuals making $500,000 and couples earning $1 million would face the current Clinton-era top rate of 39.6 percent.
The plan would slash the corporate tax rate from 35 percent to 20 percent, a demand by Trump. It also would repeal the inheritance taxes on multimillion-dollar estates, a big break for the wealthy.
"There are a lot of people still in our conference who are anxious to see exactly how this plays out with growth in the economy, what the long term deficit and debt situation turns out to be," said Rep. Steve Womack, R-Ark.

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