tax plan of trump

Trump's tax package includes the Tax Cuts and Jobs Act, which is a tax reform measure that includes a major and substantial corporate tax break as well as a temporary cut for people. The tax reform would mostly favor the rich citizens of the United States. The Tax Cuts and Jobs Act was signed into law on December 22, 2017, after the Senate passed it on December 20th. The Act's main provisions include tax Income Tax Rates, which keep the same seven brackets of individual income. The reforms are temporary and will take effect in 2018 and are set to expire in 2025, as are the rest of the individual tax cuts stipulated in the legislation (Saltzman & Eibner, 2017). The Standard Deduction is the subject of the second clause. The changes are short term and will be effected from 2018 and projected to expire in 2025 which is the case to most individual tax breaks undersigned in the law (Saltzman & Eibner, 2017). The second provision involves the Standard Deduction. The bill raises the deductions to twenty-four thousand dollars for married people who file jointly in 2018 whereas single filers and heads of households will be deducted twelve thousand and eighteen thousand dollars respectively.

Regarding Personal Exemption provision, the law suspends the exemption currently set at four thousand one hundred and fifty dollars. Healthcare Mandate provision ends the individual mandate which is a provision in Affordable Care Act which institutes tax penalties to individuals without health insurance cover (Nunns et al., 2017). Inflation Gauge on the other side changes the tax indexing measures of inflation. The law replaces the current consumer price index involving all urban consumers with chain-weighted index. Family Credits and Deduction, on the other hand, is a provision which raises child tax credit temporarily. It is only through child social security number that the child credit can be claimed (Nunns et al., 2017). Itemized deductions provision limits married couples from applying for Mortgage Interest Deduction. The State and Tax Deduction proportionately is of benefit to higher earners likely to itemize although a higher number of republicans congress members attempted to oppose.

However, on Itemized Deductions, the law does not make any alteration. On the contrary, the law puts some miscellaneous itemized deductions on suspension. Alternative Minimum Tax raises exemption phase-out and exemption amount threshold for alternative minimum tax intended to curb tax avoidance (Cole, 2016). Retirement Plans and Health Saving Accounts provision, on the other hand, has not been affected by the law. Students Loans and Tuition is also a provision in the tax plan is still intact to the current plan. The Pease provision repeals limitations on the itemized deductions. However, the regulations do not cap itemized deductions but instead, reduces their value gradually.

Estate tax provision raises estate tax for single filers temporarily. In Business Taxes provisions, the law introduces Corporate Tax Rate of twenty-one percent and allows full short-lived expensing of capital investment instead of requiring them to depreciate. Pass-through Income requires owners of the business to pay taxes on their firm’s earnings by personal tax code (Oberlander, 2017). The law, however, eliminates section 199 which involves domestic production activities. Under the same provision, the bill initiates a territorial system which stipulates that only domestic earning is subjected to tax and not foreign earning.

The Trump Tax law in my own opinion has both positive and negative effects on the economy of the U.S. To start with the positive side of the law, the reforms will boost the economy. Increasing some taxes implies that the government will earn more revenue within the temporary period of up to 2025. Cutting taxes stimulates the growth to the extent of gradually raising government revenue. Secondly, maintaining electric vehicle tax is significant to the economy as the beneficiary companies such as Tesla, General Motors and Nissan will still have more income, hence contributing to the US economy through paying taxes.

On the contrary, the tax cuts only benefit the shareholders who are highest earners disproportionately since it slashes corporate tax rates. Therefore, just a few individuals enjoy the law. Cutting down corporate tax hurts the economy of the US. A majority of the provisions will only benefit the wealthy and the higher earning investors in which, it creates a negative impact on the economy of the United States. Also, income level is likely to increase annually with inflation gradually. However, the rise will be slower since the Act will use chained consumer price index hence with time people will move to higher tax brackets which are affecting the citizens negatively.

With pass-through Business Taxes, the business owners are taxed as individual tax income rather than being taxed under the corporate tax code. The law will, therefore, create a more significant parity within the corporate code which will, in turn, hurt the economy as some business will not pay corporate tax. Alternative Minimum Tax provides loopholes for wealthy earners to avoid paying taxes in the name of Turbo Tax; therefore, the law is not fair to all United States citizens since it seems to favor the wealthy. Conversely, Estate Tax only affects about 0.2% of the U.S. population who are the ultra-wealthy. The act will ease the burden of the rich on the estate tax or eliminate the estate tax. Such parities hurt the economy.



References

Cole, A. (2016). Details and Analysis of the Donald Trump Tax Reform Plan. September 19, 2016.

Nunns, J., Burman, L., Page, B., Rohaly, J., & Rosenberg, J. (2017). An analysis of Donald Trump’s revised tax plan. Washington, DC: Tax Policy Center. http://www. taxpolicycenter. org/publications/analysisdonald-trumps-revised-tax-plan.

Oberlander, J. (2017). The end of Obamacare. New England Journal of Medicine, 376(1), 1-3.

Saltzman, E., & Eibner, C. (2017). Donald Trump’s health care reform proposals: Anticipated effects on insurance coverage, out-of-pocket costs, and the federal deficit. The Commonwealth Fund, 32, 1-14.

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