President Trump and Congressional Republicans propose to collapse individual tax brackets from seven to three – 12%, 25% and 35%. Under current law the lowest is lower and the highest is higher. In an attempt to cut down on people itemizing, the standard deduction would double, to $12,000 for individuals, or $24,000 for married couples filing jointly. The child tax credit would increase, how much we don't know yet, and there is a plan to create a new $500 for non-child dependents like elders living in the room.
The thing most middle-class taxpayers ought to be concerned about is a plan to longer let you deduct your state taxes from your federal tax return. That's bad for almost everybody, but it's especially bad in urban states like California and New York that have high state taxes. In other words, Republican tax writers are sticking it to Democrat taxpayers. The plan is would also apply the new corporate income tax, whatever it is, to pass-through businesses.
Now, 95% of U.S. businesses are pass-through businesses, also known as single-proprietor businesses. Treasury Secretary Mnuchin openly acknowledges that the challenge is to write the law so someone who ought to be taxed at the 35% top bracket doesn't reduce that to 15% by saying, "Oh, now I'm a sole proprietorship." Mnuchin calls that arbitraging the system, which is a fancy term for "cheating."
Copyright 2017. Hawaii News Now. All Rights Reserved.
Hawaii News Now
420 Waiakamilo Road, Suite 205
Honolulu, HI 96817
Main (808) 847-3246
News (808) 847-1112