Tax Preparation Topic – Trump Tax Plan ImplicationsPosted on November 29th, 2016
November was a historic month to say the least. Tension is continuing to increase between Trump supporters and those opposing Trump post-election. The minute Trump won, half of America was planning to move out of country. Some still are. Hardly anyone expected Trump to actually win. Probably not even Trump. But regardless of the shock and the chaos that came with it, Trump won. He is now our president. This means he will now be proposing laws that will affect our lives and we should only hope for his success.
One of the areas that have been a priority for Trump is the complicated tax code. We have all complained about how hard it is to understand the tax code and how much we end up paying in taxes at the end of each year. So before you pack your bags to leave the country, take a minute to see what Trump is proposing and you might actually want to stay to save some money.
Trump is planning on cutting taxes for almost all income levels. His plan would free households in the lowest brackets from owing any income taxes. Trump is arranging to lower taxes for the higher income level households too, by limiting the income tax rate to 33%, instead of the current highest rate of 39.6%. The middle brackets will also see reduced tax rates of 12 and 25 percent.
|Income Level||Single||Income Level||Married Filing Jointly|
|$0-$15,000||0%||$0 – $30,000||0%|
Due to the deduction in rates, many of the current deductions and exemptions will be discontinued. This will more so affect the higher brackets and is not supposed to affect mortgage interest and charitable contributions.
In addition to cutting taxes at the individual level, Trump is proposing cutting taxes at the business level to a flat rate of 15%. He believes this will encourage businesses to hire more employees, which will help the flow of cash in the economy.
The last major point of Trump’s tax plan is to eliminate the estate tax (a.k.a. the death tax). Trump believes that the estate tax punishes families for reaching the American dream, as the deceased person has already paid income taxes on their earned income and under current law their loved ones could end up paying a second time. Many deem this as unfair and Trump wants to put an end to it.
Trump’s proposal has been met with a lot of criticism. Many believe that it will bring on more deficits that our country cannot afford. Trump believes that he can accomplish lowering tax rates, to make more money available for growing the economy, by eliminating and reducing available deductions and loopholes for the very rich and some corporations, and eliminating the deductions that are unnecessary due to the new lower tax rates.
At this point it’s a watch and go game to see if all of these plans really take effect, but with the Republicans controlling both houses of the congress, Trump actually has a good chance of passing his proposals to reduce the tax rates.