Bosh Jarro is not a fan of the tax plan

He wrote two pieces yesterday on it, one specifically about why the "doubled standard deduction" talking point doesn't hold up to scrutiny and another claiming that this will make the plan a liability. I'm not so sure about the second, simply because facts don't seem to pull much weight in the current political environment. But it's worth reading.

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Here's the important fine print: "To simplify the tax rules, the additional standard deduction and the personal exemptions for taxpayer and spouse are consolidated into this larger standard deduction."

Here's how that math works. Let's say you are single with no dependents, and you have a moderate income. Currently, you get to take the standard deduction ($6,350) and one personal exemption ($4,050). If you are 65 or older, you also get to take an additional standard deduction ($1,250). That adds up to $10,400, or $11,650 if you're over 65.

The Republican plan would replace all these provisions with a single deduction of $12,000 ($24,000 for married couples.) That's only a 15% increase — except for seniors, who get a 3% increase.

And then your first dollar of taxable income would be subjected to a 12% tax rate, instead of the current 10%. But don't worry — the framework says "additional tax relief," as yet unspecified, will emerge for you during the committee process.

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But while there is a lot we don't know, we can identify a group of taxpayers likely to face tax increases from this proposal: people with moderate to upper-moderate incomes who take itemized deductions, like those for mortgage interest and state and local taxes paid.

Some of these deductions would be eliminated. And while Republicans like to misleadingly claim that their plan would "double the standard deduction," these itemizing taxpayers would lose the ability to take the personal exemption for themselves or their spouses, subjecting an additional $8,100 of their income to tax.

While these taxpayers would lose key tax benefits, rich taxpayers would come out ahead.

The rich would benefit from a new preferential rate for business income — while high-income workers could pay tax at rates as high as 35%, business owners would have tax on their profits capped at 25%.

Wealthy people, who own the lion's share of stocks, would also benefit from a reduction in corporate income tax rates.

And the estate tax would be abolished altogether.

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Bush knew that the way to sell a tax cut was to convincingly say that nobody would lose and everybody who paid income taxes would win. Today's Republicans have not only forgotten that — they've decided to take tax benefits away from middle-income people to give them to the rich.

As the details of this plan become known, and as the political response builds from people who fear their taxes will be raised, and as they build a coalition with special interests who would lose out from other aspects of the proposal (like investors who do not like the proposed limitation on the deduction of business-interest expenses), this plan will become an enormous liability.

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I rent and live in a state with no income tax, so I'm not too upset with all this. Interested to hear from folks who do take both deductions, though.