President Donald Trump ran on the platform that he would do several different things, but a main fixture of his campaign was promising to reduce taxes, now it seems like that might be getting underway. Donald Trump comes from a business background, so most felt he would understand the world of economics well and that if anything, he could deliver on lower U.S. taxes under his administration. Obviously, he’s barely into his campaign, but he wants to deliver on that promise as soon as possible.
Trump’s plan if put into play would get the ball rolling towards saving millions of Americans a bit of money per year. The main part of his idea involves the seven current income tax brackets, which he wants to reduce to three. For those wondering this is the current plan involving income tax: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent. Trump’s proposed plan would be: 12 percent, 25 percent, and 33 percent. Of course, the hope in this is to save people a bit of money at tax time each year.
According to Business Insider, the plan would eliminate personal exceptions but it would favor a standard deduction. This would mean that you could add more to standard, but the exceptions for dependents would be removed. Standard deduction for singles goes from a point of $6,300 to $15,000, meanwhile married joint filers go from $12,600 to $30,000.
This means that while people may see a bit of a drop due to dependents being out, Americans “could” actually save more money with this program. There is a thought that without a dependent addition, parents could conceivably have an issue with this proposed plan.
People with children are not too far out of this when it comes to dependents living in their home under 13, as the program also allows for parents to add childcare costs to their tax filing. This would be big for families who do have the dependent tax removed for kids, as they still get a bit of help with taxing. This may help along with everything else to get similar money back as parents do now.
Most assume that the Trump tax plan may affect people in the lower middle to poverty level people, but that could not be further from the truth as it does seem to be all encompassing for Americans from all walks of life throughout the United States. It even affects people from the middle to upper-middle class with the Alternative Minimum Tax being removed under Trump’s proposed plan. This affects nearly five million people annually.
On top of this, gift and estate taxes would be removed and capital gains held until death will be exempt up to $5 million per person. With all of this being said, the proposed plan would seem to be a system that works for people. However, like with all tax systems it will hit certain people differently and thus things may shift a bit.
For example, according to the Urban-Brookings Tax Policy Center, the head of the household filing status will completely be removed, as mentioned previously with dependents. This would leave millions of families, including many single parents, with a higher federal tax than they have seen previously. So these people could be hit harder than most. However, with the new system people could make that money back.
While the proposed plan from President Trump has not been officially accepted and put into play, people expect it to be put in due to the mass amount of help it has for Americans across the board. However, it will obviously not go into play for this tax period of course. It could go into affect next year for the 2017 if passed in time. This might be a tough situation due to how long some things take to move through in Washington, D.C.
[Featured Image By Pablo Martinez Monsivais/AP Images]