US tax Bill offers breaks for developers, banks and oil industry

The overhaul by Republican lawmakers of the nation’s tax laws percolated for weeks with virtually no public input, and by the end it turned into a chaotic mad dash with many last-minute changes on Friday night and Saturday morning, some handwritten in the margins of the nearly 500-page Bill. Still, it was clear that many changes expanded tax benefits for the wealthiest taxpayers, while other attempts to close loopholes fell by the wayside. The Bill would add $1 trillion to deficits over the coming decade. Here are some of the changes:

Lower taxes for top 1%

The richest taxpayers will be taxed at a rate of about 29.6% on such income, a big cut from the current top federal income tax rate of 39.6. That expansion would cost the government $114 billion more than an earlier version of the proposal.

Offshore tax break

A provision to give multinational companies like Pfizer, Google and Apple a tax break on the profits they have accumulated in offshore tax havens was made less generous than earlier versions of the proposal. But the companies would still bring those earnings home at rates of 7.5 to 14.5% — and the new corporate income tax rate, which the bill would cut nearly in half to 20%.

Banks avoid a hit

Banks and other financial institutions will still be able to avoid taxes by making payments to offshore subsidiaries. The banks got a last-minute reprieve for some transactions. The bill excludes payments related to derivatives, a big source of income for financial institutions.

Benefit for car dealers

Some last-minute changes were smaller and more peculiar: The federal tax code includes limits on how much interest companies can deduct from their taxes. But the bill now excludes from those restrictions interest paid by car dealerships.

Alternative minimum tax confusion

The bill extends so-called bonus depreciation — the ability to take big deductions related to certain corporate investments — at a cost of $34 billion, but pays for it by reinstating the corporate alternative minimum tax. The last-minute decision to scrap the repeal of the corporate alternative minimum tax left lawyers and accountants scratching their heads about the ultimate impact.

Hits for low-income earners

The Senate moved to tighten deductions for lower- and middle-income wage earners. The Bill, for example, prohibits employers from rewarding employees with gift cards so that a reward of, say, $25 or $50 in the form of a gift card doesn’t escape being taxed.