The rich can breathe a sigh of relief

After weeks of back-and-forth negotiations between Republicans who represent rich people and Republicans who represent other rich people, Congress is in the final process of voting on a tax bill that will help all rich people at the same time, while benefitting working families that depend on rich people for their jobs and income.

But hey, the standard deduction is going up so eat your lollipop.

So what exactly happened in the bill, and how will it affect the tech industry?

If you are a corporation (and remember, corporations are people folks), then this is the tax bill for you. After monstrous lobbying, Congress decided on a corporate tax rate of 21%, a significant cut from the current 35% tax rate. That’s below the effective tax rates of many top tech companies like Google and Microsoft, which on average pay in the mid-20s due to shelter schemes and plentiful R&D tax credits. Even more importantly, that tax rate goes into effect immediately in 2018, earlier than some initial tax bill drafts had put it.

The biggest benefits though are accruing to large corporates like Apple, Microsoft and the like with large overseas cash reserves. Due to the insistence of American policymakers on maintaining a worldwide tax regime as opposed to a territorial one, the U.S. government taxes all corporate profits as if they are generated domestically. This means that large tech companies have had to invent unique delicacies like the Double Irish with a Dutch Sandwich tax sheltering scheme in order to minimize their tax bills.

What is a Double Irish with a Dutch Sandwich I hear you ask. Well, if you have to ask, you probably don’t need one. Frankly, when I’m Hungary, I prefer the #5 Triple Chile with Turkey Sandwich at McTaxShelter myself.

Under the new tax bill, corporations will no longer be taxed on worldwide income, and instead a territoriality system will be used for corporations going forward. As part of the transition, there will be a one-time tax on overseas profits of 8% on illiquid assets and 15.5% on liquid assets such as cash. So, if you are Apple, and have $230 billion of cash or more overseas, this bill is going to be a wee bit of a haircut, but should provide a lot more operational flexibility going forward.

Human beings though will continue to be taxed worldwide. Because absolutely nothing will stop the tax man (except a good lobbyist, or if you are Microsoft, 81 lobbyists that is).

More good news! If you make millions of dollars from partnership stakes (aka, you run a venture capital firm), this bill ended up turning out great. It maintains the carried interest tax language that allows carry income to be considered capital gains rather than standard income, which means you can pay a tax of 20% instead of a tax of 39.6%. And while the bill extended the required holding time to three years to receive the treatment, most venture capital investments don’t return that quickly (poor hedge fund managers though).

More good news if you make millions of dollars: the math around inheritance taxes is looking better than ever. Congress’ final bill will exempt the first $10 million of inheritance, which is double the current exemption of $5 million. That should help Palo Alto homeowners make sure their kids can stay in town and enjoy Tamarine for years to come.

Speaking of Palo Alto homeowners, there is some bad news. The mortgage interest rate tax deduction is now capped at $750,000 of home value for future sales, which means that if you already bought into this market, you better hope it stays a cash market or BTC reaches $50,000.

For everyone else outside of the 1%, the tax bill is quite a bit less interesting. The child tax credit and the standard deduction are going to be doubled, which should help a bunch of families who don’t itemize and haven’t not procreated (yes, when it comes to children, the double negative can at times be appropriate). Unfortunately, the state and local tax deduction will be capped at $10,000 per return, so hopefully you don’t live in a highly-desirable state.

Basically, if you live in states like California, New York, and Massachusetts, you better hope your employer moves some of that overseas cash into your pockets stat, or prepare for a bitter winter (or for the West Coast: some sort of winter. Maybe temperatures below 50 at some point. Bitter, bitter cold).

I don’t want to leave this article on a bad note, so let me give one last piece of Good News! The Alaska National Wildlife Refuge will now be open for drilling. Finally, Mother Nature will pay her damn tax bill and get off the public dole.

There you have it folks, a bill that everyone* can like.