President Donald J. Trump announced his Tax Reform Plan over a month ago and there has been a lot of speculation about the details of the plan. But on Thursday the many more details of the plan were announced, here is what we know now:
- The tax rate for corporations will drop from 35% to 20%
- The tax rate for pass-through corporations will drop from 39.6% to 25%
- The new tax brackets are as follows (for single payers):
- No tax on the first $12,000 of income
- Incomes below $45,000 will be taxed at 12%
- Incomes between $45,000 and $200,000 will be taxed at 25%
- Incomes between $200,000 and $500,000 will be taxed at 35%
- Incomes over $500,000 will be taxed at 39.6%
- Click here for a list of the current tax bracket
- The Tax plan will remove tax deductions for adoption, student-loan interest, and some medical expenses.
- Deductions for mortgage interest will only be available for loans up to $500,000, where they were previously available for loans unto $1,000,000.
- The Plan will also remove the Johnson Amendment, the Johnson Amendment blocks non-profit organizations from making statements about politics.
- The child tax credit will raise from $1,000 per child, to $1,600 per child.
- Finally the Tax Reform Plan will no longer allow you to deduct the state taxes you pay.
Luckily it looks like homeowners will not lose their deductions, which was a rumor circulating over the last couple weeks. This bill will only negatively affect those in high tax areas such as New York and California because they will no longer be able to deduct what they pay in state taxes. The Daily Wire makes a great point by saying “But then again, why should the federal government subsidize higher tax rates in leftist areas?” and he is right, the federal government shouldn’t subsidize state tax which they have no control over.
Overall this Tax Plan is looking far better than the current system but is still not perfect. I would have liked to see more cuts to the income taxes, but that being said this is a major leap in the right direction. The Corporate tax cuts are the biggest changes in this plan and would lead to many more jobs and would allow more businesses to actually survive in the U.S. without outsourcing to other countries.