How senior living might win — and lose — under the new tax bill

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Trump Meets With GOP House Leaders And Ways And Means Committee Members
Trump Meets With GOP House Leaders And Ways And Means Committee Members

House Republicans have unveiled an ambitious plan to revamp the nation's tax code. If enacted, the measure promises to be a mixed bag for senior living operators.

First the good news: The Tax Cuts and Jobs Act trims the corporate tax rate to 20% from 35%. That can only help the bottom line at many for-profit senior living organizations. Top executives also will see lower personal income taxes if a planned increase in the top income threshold takes effect. They also would benefit as the estate and alternative minimum taxes are repealed.

In addition, the standard deduction for individuals and married couples would double. A new “family tax credit” also would increase to $1,600 and $300 credit for each parent.

Now the bad: The plan will require $1.5 trillion in additional borrowing over the next decade. Experts generally agree that funding reductions in the Medicaid and Medicare programs will be all but certain — at a time when senior living operators are expanding participation in both programs.

The House measure also will cap corporate interest deductions at 30% (before interest, taxes depreciation and amortization). Firms carrying large debt loads could be adversely affected as a result. In addition, that same “family tax credit” might incentivize people to keep aging parents at home longer, as it would give them a $300 “non-child dependent” credit.

In a kickoff ceremony, the White House downplayed the benefits that corporations and wealthier Americans will enjoy. Instead, it touted tax breaks for the middle class and the promise of more jobs going forward.

The Senate's version of the bill is due out next week. In a statement released Friday, LeadingAge blasted the plan. “America's families will be shocked by the changes,” said CEO Katie Smith Sloan.

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