Trump’s tax reform plan is touted as the biggest attempt at reform since Reagan was in office. While critics denounce Trump’s plan, saying that it will increase national debt and only benefit the rich, Trump’s plan actually has something for everyone.
Trump’s plan promises to kill the estate tax, also known as the “death tax.” Trump feels that inheritance money is taxed when it is earned, and that if a parent or relative wants to leave money to family members, it should not be taxed again. Getting rid of the estate tax would also benefit small business owners and farmers who desire to leave established businesses to family members. No longer would anyone have to sell their newly-acquired property in order to pay an exorbitant tax on their gift. Trump would also like an end to the alternative minimum tax, saying that there needs to be one simple tax code, and marriage penalty tax.
What Trump proposes is lowering the number of tax brackets from seven to three – from ten percent on the low end to thirty-five percent on the high end. Proponents of the plan say that instead of filing pages and pages of individual income tax, taxpayers will be able to send in their information on something the size of a post card. No longer will taxpayers need to itemize deductions in order to keep as much of their money as possible.
Let’s talk about those new, simpler tax brackets. The lowest end will pay from zero to ten percent of income in taxes. The middle tax bracket is twenty-five percent, and the highest bracket is thirty-five. Standard deductions will be increased for both single people and married couples. Singles will see their deduction go from $6,350 to $15,000; married couples will see their deduction of $12,700 rise to $30,000.
While many deductions are going to be phased out, Trump’s plan keeps tax deductions regarding home owndership, charitable giving, and retirement savings will still be available.
Yes, businesses are going to see tax breaks too. Trump’s plan calls for a twenty point tax reduction for businesses – from 35% to 15%. Trump expects companies to use this money as capital to make the business grow, expand jobs, and to keep those jobs in America. Small businesses will also see their tax rate – now a whopping 39.6 percent – fall to fifteen percent under Trump’s plan. Trump proposes a one-time repatriation of corporate cash stored in overseas accounts, then putting an end to the deferral of taxes paid on company money earned overseas. Corporate loopholes that favor special interests will be phased out. The goal is leaving businesses with capital so that entrepreneurs can grow their companies – hiring new workers, growing jobs here on American soil.
Something families can look to benefit from is Trump’s childcare tax credit plan. Contrary to some reports, Trump will not be helping only wealthy families. Couples making over $500,000 per year and single parents making $250,000 will not be allowed to take the childcare tax credit. Let’s first outline the plan – for the first time ever, family caregivers (stay at home moms, grandparents, etc) will be able to take advantage of the credit as if they used a paid caregiver. Families could get a credit for up to four children; taxpayers receiving the EITC (Earned Income Tax Credit) would be eligible for a spending rebate (on childcare) of 7.65 of qualifying child care expenses. Married joint filers earning $62,400 or less would qualify for the same spending rebate as individuals receiving the EITC. Therefore, contrary to claims that only the wealthy will benefit from this credit, many working families, even those who leave children with a relative, will be eligible to take advantage of this wonderful new credit.
Critics also crow about how Trump intends to pay for this massive tax overhaul. One word: growth. Steve Mnuchin has been quoted as saying that the Trump administration “believe(s) we can get to three percent sustained economic growth.” Trump and his advisers believe that with more jobs and more money flowing through the economy, growth in this manner will offset the tax cuts. Critics say that the plan favors the very rich, but in actuality, several tax loopholes which the wealthy use to their advantage will be eliminated under the new reform.
President Trump’s new tax reform plan has the interest of ALL Americans at heart. No longer will a lucky few benefit from the miasma that is the current tax system. The American people plead with Congress to help push this tax reform through and help make America great again.