Make no mistake “Working American families”, the creative math in this tax bill may very likely increase your tax burden rather than provide you “the greatest tax savings ever”.
If the income tax brackets in this article https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968 are accurately portraying the intent, your attention is first drawn to the lower rates. But what they don’t tell you is that you can reach a higher tax bracket quite a bit sooner than current, especially if you are single. For example, a single person with taxable income between 157,500 and 191,500 is presently taxed at 28%. With the current proposal these income levels are taxed at 32%. The House and Senate version both want to start the 35% tax bracket for singles when they hit $200,000 incomes. Under current law single taxpayers do not reach the 35% tax bracket until their taxable income goes up to $416,000. Smaller jumps for married taxpayers filing jointly but they also reach higher tax brackets sooner with both the House and Senate versions.
Increasing the standard deduction from 12,700 to 24,000 for married filing jointly sounds good, but if you take into account the proposed elimination of the personal exemption currently at 4,150 per person, married couples with 2 or more children will lose. Under current law 12,700 plus 4,150 times 4 (2 parents with 2 kids) totals 29,300. Is anyone doing the math? With only the 24,000 standard deduction available, there goes 5,300 deduction from your taxable income. That number goes up if you have more than 2 children.
More important is losing a good part of our itemized deductions. Our tax laws have been structured so as to encourage the good and discourage the bad. This bill, if it goes through, discourages home ownership by reducing the corresponding tax benefits.
Doubling the estate tax exemption to $11.2 Million for singles and $22.4 Million for married couples- I don’t think that applies to America’s “working families”.
There is much more but let’s just see where it all lands.
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