Submitted by The Kenny Guinn Center for Policy Priorities
The Kenny Guinn Center for Policy Priorities today released a new policy brief, “Proposed Congressional Tax Plans: Implications for Nevada,” that discusses some of the key provisions of the Senate- and House-sponsored versions of the Tax Cuts and Jobs Act (TCJA) bill. Guinn Center Director of Economic Policy, Meredith Levine, who previously worked at the U.S. House Appropriations Committee, analyzed both the Senate and House versions of the TCJA and drew the following conclusions:
- The generally lower statutory tax rates in the Senate legislation could help many individual taxpayers see a reduction in their federal income taxes, though the modification to rates would expire after the 2025 tax year. The average tax change across all income percentiles would be a decrease of $2,130 in 2019. By 2027, when the provisions sunset, the average tax change across all income percentiles would reduce to a decrease of just $120. With only four brackets in the House plan, some taxpayers could see their federal income taxes decrease, while others could see their federal income taxes increase.
- The potential elimination of the state and local general sales tax deduction under both the House and Senate tax plans would affect nearly 20 percent of Nevada’s taxpayers. The State is ranked 6th nationwide in the deduction as a percentage of the total amount claimed. A repeal of the state and local general sales deduction could be harmful to Nevada’s residents and have consequences for the State’s ability to finance its programs and services.
- Nevadans claim about $2.3 billion under home mortgage interest deduction. Both the House and Senate proposals repeal the portion of the deduction allowed for home equity loans, which could affect those Nevadans whose loans qualify currently under the deduction.
- The House bill would increase the child tax credit (CTC) to $1,600 per qualifying child, while the Senate bill would raise the CTC to $2,000 per qualifying child. In the 2015 tax year, 225,590 Nevada taxpayers took the child tax credit, which represents 17.0 percent of all returns filed, so the increases could have broad-based benefits. However, the potential repeal of the personal exemptions might offset some of the gains.
- The Senate tax plan proposes to eliminate the penalty for the health care individual responsibility payment. This would provide tax relief to about 5.5 percent of Nevada’s taxpayers (based on IRS data for the 2015 tax year). However, the elimination of the penalty could leave many millions of Americans uninsured by 2027, and Nevada may be particularly hard-hit.
Once Congress releases its single TCJA tax plan, Levine will be examining how the provisions could impact Nevada.
