Last week, we looked at an overview of the basic points of President-elect Donald Trump’s tax policy. Moving on, we now need to look at the first of of his four basic policy points: across the board tax cuts.
Trump’s Fiscal Policy Fact Sheet on his campaign website states,
(Bullet info points created by the Tax Policy Center in their analyzation of Trump’s tax plan)
To begin, our tax bracket system would be simplified. Currently, there are seven different tax brackets. Each bracket is based on income. Here is an example from Fidelity on determining which tax bracket you fall into:
Another major point of Trump’s taxpayer cuts is the rise in standard deductions for single filers and joint filers. For an example of standard deductions in 2015, here’s a list from Bankrate:
This tax policy plan would also repeal the alternative minimum tax. This is an additional form of income tax that the United States’ government layers on for certain individuals, corporations, etc. that have exemptions or special circumstances allowing for lower payments on the standard income tax. This is an important step as the AMT was originally created to keep wealthy taxpayers from finding loopholes, but ended up hurting the middle class significantly.
Finally, the last point of this tax policy that we will individually address is the repeal of federal estate and gift taxes. An especially despicable tax, the estate tax focuses on the transfer of wealth post-death, and the gift tax focuses on transfer of money or property during your lifetime. These taxes harm the average American family that simply wants to transfer wealth from family member to family member.
Say that your grandparent passes away, and in their will, you are given their house. With the federal estate tax, you would be required to pay tax dollars on this house. Or, if your parents simply wanted to give you a sum of money or a piece of land, the giving party could be required to pay taxes on this gift. Repealing these corrupt taxes will not only help the typical American family, but it would also get rid of a bit of unethical taxation in this country.
Trump’s tax cuts are starting to be embraced by several members of Congress. Even Senator Chuck Schumer, an incoming Democratic leader, is considering acceptance of some of Trump’s points in order to further compromise. As the months go on, we’ll see how Trump’s tax plan plays out as it is taken up in Congress.
Although Trump’s tax cuts are being debated by many, it is clear that these tax cuts would significantly affect the ordinary American family by helping keep more money in their pockets. As we continue to break down the other main points of Trump’s tax policy, we’ll begin to see how the pieces fit together and the effect this policy would have on our economy.
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