President Donald J. Trump fully approves of a new tax reform plan released by the Republican Party. The Tax Cuts and Jobs Act is the most sweeping plan for change the party has released in recent years, and it stands to have beneficial impacts on a significantly high number of Americans. According to House Speaker, Paul Ryan, the act makes “pro-growth reforms” that will enable the country to keep up with the rest of the world economically.
Let’s break down the benefits and see exactly what’s coming.
- The TCJA will reduce the number of tax brackets across the board, tightening them up to just four levels from 12. Percentages will begin at 12 and rise through 25, 35, and 39.6. These new brackets probably mean that most Americans will see an overall reduction in taxes.
- Low incomes (under $24,000) will no longer be taxed at all. Couples with a combined income of less than $90,000 will be taxed just 12 percent, rather than the previously higher percentage. This represents a significant portion of America’s most disadvantaged population.
- The TCJA will also enact mandatory identification verification for anyone claiming tax credits like the child tax credit or the American Opportunity Tax Credit. This is expected to tighten up tax refund fraud, keeping more money in the pockets of those who truly deserve it.
- Within the plan, the GOP is allotting families a child tax credit of up to $1,600 per child, up a total of $600 from the previous credit. They also announced a plan to instate one additional “family flexibility” tax credit for up to $300.
- If instated, the GOP will also slash corporate taxes by over 15 percent, ensuring the new 24.1 percent tax falls in line with Organisation for Economic Co-operation and Development (OECD) guidelines. Their hope is that such a move will reinvigorate job creation.
- TCJA guidelines also slash the mortgage interest deduction from a robust $1,000,000 to $500,000, encouraging families to invest in properties that are easier to afford and less prone to foreclosure in a fluctuating market.
What do you think this tax plan will do to the economy, if it passes?