The GOP’s tax reform plan, explained

President Donald Trump was so pleased with the Republican tax reform plan, especially the claim that many Americans will be able to file their taxes using a one-page document, that he kissed a mock tax form.

However, not everyone in Washington shares his enthusiasm.

“One thing is crystal clear, this plan is a tax burden that ought to be on the backs of the wealthy and the biggest corporations. But instead it drops it squarely on the backs of the middle class. You’re a big corporation, you’re a wealthy individual, you do great. You’re a middle-class person, you suffer,” said Chuck Schumer, Democratic minority leader.

Tax professor at San Jose State University and former senior tax attorney for the Internal Revenue Service, Caroline Chen, says the elimination of deductions such as medical expenses, student loans, and state and local taxes will affect many families.

“It’s drastically eliminating the amount of deductions you can deduct on your schedule, and that’s actually going to have an effect on the total amount of tax that you’re going to have to pay to the federal government.”

She commends the doubling of the standard deductions, increasing child tax credit, and preserving of the 401k savings plan.

She also says that the reduction of the tax brackets from seven to four may benefit lower-income individuals.

“If you look at the new tax brackets which is if you make $0-24,000 you owe no tax at all. And then from $24,000-$94,000 you only owe 12% of whatever your taxable income. St the top end if you make over a million dollars, that tax bracket is still going to be 39.6%.”

Among the debate over who stands to lose from the GOP’s plan, Chen says the upper middle class is overlooked.

“The people who are making somewhere between $280,000-under $1 million. I’ve done some computations and it looks like those people will actually end having to potentially pay more taxes depending on their family situation.”

Despite the resistance from the Democrats, Chen believes the GOP tax bill will eventually make it to the president’s desk for signature.

Four House Republicans already oppose the plan and house speaker Paul Ryan can only lose 22 Republican votes.

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  • Mario
    5 November 2017 at 6:58 pm - Reply

    The Trump Tax cut, not a tax reform, according to GOP, it will create more jobs, and savings of $1100+ for the middle class. They expect 80% of the middle class will used the Trump Tax post card, others will used itemized deduction. The GOP only disclosed the RICH(this are the job creators, business owners) making $1M will remain at 39.6% tax, but in their bill, they did not disclosed publicly,the first 200K after $1M earnings, an added tax of 6%, the RICH end-up paying 45.6% (39.6+6). The GOP primary objective on this tax cut is to win election and to grow the economy is secondary. The rich who can afford to hire TOP CALIBER accountant/lawyers, will NEVER pay any Taxes at all, because the 70K pages IRS Tax code is full of loopholes.The only chance for Trump to simplify the Tax code and real tax reform will come, once he will be re-elected. Reason is he belong to the top 1%-the RICH, they run the US economy, they payroll & own the politicians, they are the major political donors and contributors…do you think Trump want to pay taxes and repeal, simplify the tax code and come out with a real tax reform, that remain to be seen.. ???