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Let the fight begin September 28, 2017

Posted by hslu in Congress, 美國, Economics, Taxes, Trump.
Tags: ,

The fight is on tax reform proposed by the Republicans and endorsed by Trump.

The new proposal calls for roughly doubling of the standard deduction which in essence eliminates many tax payers’ incentive to itemize (schedule A). Deductions on medical expenses including health insurance payment, lab, test and doctor fees, medicines and other costs, probably will be gone. 

Mortgage interest deduction will be gone too for some tax payers because their itemized deductions will be lower than the standard deductions. As such, even the new plan calls for retention of mortgage interest deductions, this deduction is basically eliminated for most tax payers.

Well, none of this new rules on deductions will affect me but I’ll be happy to take the doubling of the standard exemption starting with the 2017 tax return.

However, I don’t think Republican’s tax reform proposal will be revenue neutral. Where will the new revenue come ftom to offset the tax cuts for higher income and the super-rich tax payers? Don’t forget the corporate income tax will be cut by roughly 42%, from ~35% to 20%? On top of that, the death tax will be eliminate too.

I know that Republican will rely on a bigger pie to collection more taxes because tax reform, Republican will argue, will grow the economy which will provide a bigger tax base to collect federal tax from.



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