Trump Tax Plan: 8 New Changes That Almost Everyone Hates
Whether you love or hate Donald Trump, you might have to live with his new tax plan. If it becomes law, it will mark the first major change to the U.S. tax code in decades. Called the Tax Cuts and Jobs Act, Trump’s plan suggests increasing the standard deduction, decreasing the number of tax brackets to four, and getting rid of personal exemptions.
Although the plan would lower most U.S. citizens’ taxes, the nonpartisan Joint Committee on Taxation compiled a report that shows one in five might get a tax increase by the year 2027. Although the tax plan does add some benefits, it eliminates others. Find out what almost everyone hates about the new plan and decide where you stand.
1. Corporate taxes — cut
According to The New York Times, the GOP tax reform ensures a cut in corporate taxes — no matter what. Of course the general public opposes this — it’s an outrage. Who wants to make the rich richer at his or her expense? Enough said.
Next: Killing the American dream
2. Mortgage interest rate deduction — reduced
If the new tax plan goes into law, the American dream of homeownership will take a big hit. The mortgage interest rate deduction will drop from $1 million to $500,000, according to Fox News. If you’re thinking that amount is aimed at those in the upper middle class, you’re not alone.
Next: Say ba-bye to itemized deductions.
3. Itemized deductions — gone
The new tax plan limits itemized deductions, which might increase your federal taxes, according to Business Insider. Because approximately 70% of U.S. filers claim the deduction, this could affect a lot of people. You might think those who itemize typically make a lot of money, but 86.8% of taxpayers who itemize have adjusted gross incomes below $200,000.
Next: A tax cut for business owners
4. Pass-through income — taxed at 25%
Trump’s tax plan includes a new, 25% rate for pass-through business income, according to Business Insider. Pass-through businesses are comprised of partnerships, sole proprietorships, and S-corporations, and pass-through income is money that passes through businesses and into owners’ returns.
Currently, pass-through income gets taxed only if it is a profit, and individuals pay a hefty 39.6%. Should this change happen, it will benefit none but the wealthy — and Trump personally, because he has set up a number of S-corporations for development projects.
Next: Alternative facts
5. Alternative minimum tax — gone
Trump wants to get rid of the Alternative Minimum Tax, which accounted for a large portion of the $38.5 million tax bill he paid in 2005, according to Business Insider. Currently, the tax is designed to make sure high-net-worth individuals pay their fair share when it comes time to settle up with Uncle Sam — and it applies to corporations, estates, and trusts, too. Trump intends to repeal the AMT only for individuals, however, reported Business Insider.
Next: Trump benefits
6. Estate tax — gone
The estate tax, also known as the death tax, applies to you if you inherited $5.49 million or more in 2017. This tax doesn’t affect many Americans, according to Business Insider, but if Trump eliminates it completely, it will benefit him. If he’s really worth $10 billion like he says he is, he’ll be enjoying with some colossal savings if the goal of eliminating it completely by 2024 becomes law.
Next: Bringing foreign cash back home.
7. Repatriated funds taxes — reduced
Trump wants to lower taxes on repatriated funds — corporate foreign money that is taxed in the U.S. — to encourage multinationals to invest money in the U.S. instead of abroad, according to Forbes. He wants to implement a one-time tax on overseas money at a rumored rate of 10%. The problem with this plan is that Trump has not said exactly how he proposes to get companies to stop keeping their profits overseas going forward. This is an issue that politicians have been struggling with for decades, and Trump’s plan doesn’t solve it.
Next: Find out when you’ll benefit from the plan.
8. First-year benefits — for top earners only
According to the Tax Policy Center, almost half of the tax cut benefits in the new plan would go to the top 5% of U.S. earners in the first year. That doesn’t leave much for the other 95% to fight over. If this plan passes, 98% of multimillionaires would still get a tax cut in 2027 — as opposed to only 27 percent of households with incomes of less than $75,000.
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