Let's take a realistic look at the White House's Tax Reform. The Tax Cut, according to the chief economic advisor, Gary Cohn, "is purely aimed at middle-class families," ABC News reported. Trump himself has referred to his reform as, " The largest tax cut in our country's history," and "historic tax relief to the American people." He hopes to have the bill passed through the house by Thanksgiving and on his desk by Christmas 2017.
Promises made by the Treasury secretary Steve Mnuchin, state that the tax reform will not be beneficial to the wealthy.
The house speaker Paul Ryan also chimed in by saying, "its entire purpose is to lower middle-class taxes."
The non-partisan Tax Policy Center (TPC), after analysis, disclosed that the proposed tax reformation is set to deliver 50 percent of its benefits to the top one percent, leaving the poorest families with nothing more than one percent growth of their after-tax income. One of every five targeted middle-class households in actuality endures a tax hike.
Tax brackets
Who set the income levels for the proposed tax brackets of 12 percent, 25 percent, and 35 percent? According to Kevin Hassett, chairman of the president's Council of Economic Advisors, the tax-writing committee in Congress was credited with the power of designation.
Those in the 12 percent bracket are considered to be individuals who earn up to $45,000.00 per year and couples who meet the $90,000.00 mark.
Individuals who meet the $200,000.00 mark and couples encroaching $260,000.00 comprise the 25 percent bracket.
The 35 percent bracket is proposed for individuals with income above $500,000.00 and couples who meet the $1-million-dollar mark.
The highest tax bracket remains unchanged at 39.6 percent.
What can the middle-class or average citizen expect from the tax reform?
- The elimination of state and local tax deduction consequentially allows citizens to deduct up to, $10,000.00 from their federal bill.
- An increase for individual filers of $12,000.00 and $24,000.00 for married couples.
- The elimination of personal exemptions and itemized deductions.
- Interest becomes deductible for homeowner loans up to, $500,000.00, previously $1 million dollars.
- The elimination of student loan interest deductions.
- An increase in child tax credit from $1,000.00 to $1,600.00.
- The elimination of the alternative minimum tax.
- 401(k) plans, the amount workers can contribute rises to $18,500.00 next year, those age 50 and above must add $6,000.00 of so-called catch-up contributions.
- The elimination of alimony payment deductions.
- The elimination of moving deductions.
- There was no repeal of Obamacare despite debates.
The reality remains that the richest families will get the biggest tax cuts, corporate tax will go down to 20 percent rather than 35.
"Pass-through" companies like L.L.C.'s win. Estate tax applicable to estates worth $5.5 million and above will be repealed. The wealthy will continue to prosper, like never before.The absurdity of claims stating that this GOP and reform are in favor of the middle-class is odious.
It's placing a meager amount of money into the hands of a few, in a few but minor ways, taking it back plus interest in others, redirecting it into the pockets of the top one percent. Ultimately it is landing the country trillions of dollars in debt.
This is stated as being the first attempt by the Republicans at a tax reformation bill. That being said, officials have declared that it is far from their final product. Keeping a close watch on these claims of updates to come, will be wise.
The bill in its current state will need significant Democratic support to be passed as a law. As per the Senate rules if the proposed legislation does not increase the long-term deficit it may pass with 51 votes, however, in its current form, the tax reformation bill can increase the budget deficit by $1.51 trillion dollars over the next decade. Citizens are left hoping for the best but preparing for the worst.
