The Tax Plan.
U.S. Gov Connect Reporting On U.S. Government Programs & Regulations
By: Patrick Mansfield | U.S.Gov Connect
The Trump Tax Plan
The four-fold integrative approach to the Trump Tax Plan aims to free up corporate capital by lowering the corporate tax rate to make American-based global companies more competitive worldwide.
Fewer Taxpayers – 75 million households, those who make less than $25,000 or $50,000 jointly, will no longer have to pay any taxes, saving a projected average $1000 per person.
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Income Tax Rate
Long Term Cap Gains/ Dividends Rate
Heads Of Household
$0 to $25,000$0 to $50,000
$0 to $50,000
$0 to $37,500
$25,001 to $50,000
$50,001 to $100,000
$37,501 to $75,000
$50,001 to $150,000
0 $100,001 to $300,000
$75,001 to $225,000
$150,001 and up
$300,001 and up
$225,001 and up
There are four primary goals of the new Trump tax plan. First, it aims to provide tax relief to the middle class. Second, it simplifies the existing tax code. Third, it promotes the American economy by helping to prevent corporate entities from leaving for better tax rates from other nations. Lastly, it won't increase the national deficit. These are the four main proposals set forth by the Trump administration. Most likely there will be adjustments to the Trump tax plan, and there will be doubts that it will help the middle-class as intended.
Reaching These Goals With The Trump Tax Plan
There are several ways the new tax code could reach the goals set forth by the plan. The individual tax code will be simplified from seven brackets to four brackets. The code also eliminates the marriage penalty and AMT, or Alternative Minimum Tax. In addition, the corporate tax rate will be cut to 15 percent, which is the one of the lowest in the modern world. The death tax will also be eliminated, allowing families to save money earned for themselves and their children.
One of the biggest concerns with a new tax plan is often the cost incurred by reducing taxes, but the tax cuts proposed in the Trump plan are paid for by removing loopholes and deductions that are only accessible to the richest taxpayers. Corporate cash will also be repatriated if it is held overseas in a tax haven, and corporations will no longer be allowed to defer taxes on earnings outside the United States. The plan also works to reduce or eliminate the loopholes that allow corporations to take special tax breaks that aren't available to all businesses or individuals.
It was never the intention of the federal government to have every single American pay income tax. In fact, only one percent all American citizens were required to pay the tax when it was first enacted. The new Trump plan attempts to remove more than 73 million American households from the system. It does so thanks to the new brackets, which are detailed below:
Income Tax Rate: 0% (Single Filers: $0 to $25,000 | Married Filers: $0 to $50,000 | Heads of Household: $0 to $37,500)
Income Tax Rate: 10% (Single Filers: $25,001 to $50,000 | Married Filers: $50,001 to $100,000 | Heads of Household: $37,501 to $75,000)
Income Tax Rate: 20% (Single Filers: $50,001 to $150,000 | Married Filers: $100,001 to $300,000 | Heads of Household: $75,001 to $225,000)
Income Tax Rate: 25% (Single Filers: $150,001 and up | Married Filers: $300,001 and up | Heads of Household: $225,001 and up)
These new brackets constitute one of the largest rate reductions in the history of America, and they will make many of the existing deductions and exemptions redundant or unnecessary. The 10 percent bracket will experience very minor change to their deductions, and the 20 percent bracket will maintain over half of their existing deductions. The last bracket will see the most changes, but mortgage interest deductions and charitable giving are not affected for anyone. There is some worry over social security pay and what the tax plan could mean for beneficiaries of the system, and some experts have claimed the new plan will reduce the self-sufficiency of the current social security pay system.