The wealthiest Americans would benefit the most from President Donald Trump's proposed tax cuts while many upper middle-income people would face higher taxes, independent experts said on Friday in the first detailed analysis of the plan. Those are important details, which will be sorted out by Congress. And some Republicans in Congress are already chafing at repealing the deduction for state and local taxes.
In an initial analysis of the Trump and Republican nine-page framework for tax reform, the Urban Institute and Brookings Institution's Tax Policy Center found that a bulk of the benefit in the tax plan would be seen by Americans among the top 1% of earners. The plan will restore growth to the economy, more than one Republican said. "It's time to take care of our people, to rebuild our nation, and to fight for our great American workers", he said while speaking at the Tax Reform Event in the USA on Wednesday.
The business tax cuts are estimated to cost $2.6 trillion over 10 years, while revenue from individual income taxes would actually increase slightly.
The chart factors in major parts of the plan including collapsing the existing seven individual brackets into three; cutting the corporate income tax to 20%; and repealing the existing individual alternative minimum tax.
Team Trump would cut the corporate tax rate from 35 percent to 20 percent, and the tax rate on pass-throughs, such as partnerships, from 39.6 percent to 25 percent. But the information released didn't include the income levels applied to the rates, making it hard to know how a typical family's tax bill may be affected.
In a statement, NAM president and CEO Jay Timmons said the group was "honored" to have Trump speak about "the critical need for bold tax reform". "My plan is for the working people", he said. Thus, "a married couple - up to $24,000 - can spend their money on their family, on their children, on what they have to do", Trump said.
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The standard deduction would almost double to $12,000 for individuals and $24,000 for families, basically increasing the amount of personal income that would not be taxed. It proposes tax cuts for wealthy Americans, businesses and the middle class while protecting deductions such as mortgage interest and charitable contributions. Without that key information, it's impossible to calculate what your taxes will be under the plan and compare them with your current tax liability.
Now that it's time for a new budget season, Republicans want to use reconciliation again, but this time they want to use it on tax reform. "Everyday Americans and future generations lose under the Trump tax plan, while the wealthy keep winning".
After the plan has fully taken effect in 2027, taxpayers in the bottom 95 percent will see a 0.5 percent increase in after-tax income, while the top 1 percent will see after-tax income increase of 8.7 percent. Every time state or local government raises taxes by $100, someone in a 35 percent federal tax bracket pays $35 less to the federal government.
The top 1% would benefit far more than everyone else..
New benefits would be given to firms in which the profits double as the owners' personal income. The one that will do the most, they say, to improve the country and the lives of its citizens. This creates a possible loophole for rich investors, lawyers, doctors and others, but administration officials say they will design measures to prevent any abuses.