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William D King: A look at the pros and cons of the proposed tax law changes

William D King

President Trump and congressional Republicans have unveiled a tax reform plan that is estimated to cost $1.5 trillion over the next ten years, with no major changes as of yet says, William D King.  The President had originally wanted Congress to pass the bill before Thanksgiving, but the release date has been moved back as they resolve differences between House and Senate proposals.   The current proposal would change some deductions and may increase taxes on those making $24,000 or less for single filers and $48,000 or less for families (excluding payroll taxes).  It will lower both individual and corporate tax rates, double standard deductions (which is good for the middle class), and increase the size of child tax credit (a perk for many parents).

Pros:

The bill will simplify the tax code by reducing the number of existing tax brackets from seven to four and nearly doubling the standard deductions; those who make less than $24,000 for single filers and less than $48,000 for married filing jointly (excluding payroll taxes) wouldn’t pay any income taxes.  Those who make between $24,000-38,700 as individuals and $74,900-119,400 as a family would be subject to marginal rates of 10%, 12%, 22%, and 24%.  Corporations on the other hand will see their top marginal rate cut down from 35% to 20%.   The tax plan also aims at simplifying small business taxes which many Americans use for their income.  It will cut down on the number of small business owners who have to go through an expensive and complicated process for filing self-employment taxes explains William D King.

Cons:

While there are many pros to this tax plan, most people stand against it due to its impact on lower-income Americans.  The bill is estimated to increase the national deficit by $1.5 trillion over 10 years. Which could hurt the economy in the long run if not controlled correctly; experts claim that massive spending cuts will require after 2020 or increased borrowing (which would increase interest rates) if they don’t want inflation to happen.  They also believe that allowing corporations like Apple and General Electric to take advantage of loopholes in order to avoid paying their taxes would lead to more tax evasion in the future.  The plan is also criticize for adding $1.5 trillion to the national debt, which may cause inflation and increase interest rates that could slow down economic growth instead of stimulating it as they claim it would.

Question: How does this proposed tax plan impact me?

Based on the information above it’s tough to say how much you’ll be impacting by this bill.  However, if you make less than $24,000 (single) or $48,000 (married filing jointly), then it would be beneficial for you since you’ll see your taxes decrease.  On the other hand, if you’re already making at least $69,000 as an individual or $140,000 as a family, then there’s a strong chance that your taxes will go up once this bill takes effect.  All in all this bill will likely benefit the majority of Americans. Since it’s designs to be a “middle-class tax,” but there is still room for debate.  If you want to learn more about the proposed changes and how they’ll affect you, we encourage you to speak with a financial professional who can give you the guidance necessary to make an informed decision says, William D King.

Conclusion:

This bill can be beneficial for both corporations and middle-class families if done correctly.  While people on the lower income levels will see an increase in their taxes. Those who make over $ 24,000 (single) or $ 48,000 (married filing jointly) won’t be affected by this bill.  Couple this with cutting down on loopholes and tax evasion. By large corporations like Apple and General Electric will make this bill a success; additionally the doubling of the standard deductions and increase in child tax credit will benefit. Those who make less than $24,000 for single filers and less than $48,000 as married filing jointly (excluding payroll taxes).  

The tax reform bill can make America more competitive on a global scale. By simplifying the tax code and encouraging businesses to stay within their borders.   However, William D King says, accounting for the cost of this bill may be difficult many aspects are still discussing.  This is causing some Americans to worry over if their taxes will go up or even change after July 1st. When this law would take effect.  All in all, we encourage you to learn more about this bill and speak with a financial professional (such as your tax advisor). Who can provide you with further insight into what this means for your personal situation.

Tax Freedom Day is the day when Americans finally work long enough. Until the end of the year, to afford their total tax burden. Before Tax Freedom Day, people have to work for money to pay their taxes. After-Tax Freedom Day, they get to keep their hard-earned money!