The Republican tax plan is a joke. If you think you’re going to get a huge tax cut, you’re dumber than a Trump voter. Even when you look at the consolidation of tax brackets from seven to four, the only people to see a major decrease in taxes are married couples filing jointly who report taxable income of between $480,050 and $1 million. There is a slight decrease for those households with reported income of between $156,150 and $287,950, but tax rates for most other brackets actually increase. The lowest bracket will actually see their tax bill increase by 20 percent.
It is obvious the GOP tried really tried to give the rich a massive tax cut without taking it out of the middle class, but they failed miserably. Again, the brackets alone are kind of a wash, in that most people making a half million or more per year will see a massive decrease in taxes, while the middle and working class folks will see a tax increase. Put it this way, the guy who owns a fast food franchise might see a 20 percent reduction in his tax bill, while his burger flippers will see an increase. Now, is that fair?
The GOP has also tried to discourage even more of the lower end of the income spectrum from itemizing deductions, by increasing the standard deduction. However, they actually blew it for married couples with children. If you get married and have children, expect your income tax bill to go up. Yes, that’s right, red state Trump voters; if you got married to have children your GOP heroes are screwing you. Again.
Again, the GOP wants you to stop itemizing, so they eliminated most other deductions. The exceptions were the mortgage interest deduction and the property tax deduction. However, with these, they actually instituted caps that could result in higher taxes for many. You can only take the mortgage interest deduction if your home is worth less than $500,000 and your property tax deduction is capped at $10,000. This is an obvious slap at people who live in blue states like California and blue places like New York City and Washington, DC, where $500,000 is unrealistic. They also eliminated the deduction for state and local taxes, which is another obvious slap at people who live in blue states. The problem is, while state taxes are lower in red states, the need for the deduction is greater there because they have lower incomes. In other words, while the GOP is trying to screw those who live in blue states, they may end up hurting their beloved red states more.
If you have a small business that you operate as a sole proprietorship, you should know that the GOP tax plan is really bad for you. The GOP is touting a 25% “pass-through” tax rate, but it is limiting it to certain types of businesses. If you own a personal service business like a law firm, an accounting firm, an investment advisory or consulting firm or something like that, you will not qualify for the special 25% rate, and your tax bill is likely to increase.
On the other hand, while you are likely to pay more taxes under this bill, corporations will make out the best. And because of the way the GOP is going about it, we taxpayers will be screwed in other ways. For one thing, large corporations will pay 20 percent of their net income without doing anything special to help the community or the people. And all previous deductions will be eliminated, except for the research and development credit and the low income housing investment credit. They will no longer get a credit for domestic production, which means it will again no longer matter if they manufacture here or overseas. They will no longer get a credit for investing in infrastructure, or one for corporate charitable contributions, or for investing in energy production, or many other current credits they get for doing things that are beneficial to society.
The worst part of all this is, none of this bill pays for itself. It creates massive losses in revenue, with nothing in the bill to offset that revenue. There is some relief for small businesses and there is a slight bit of middle class relief. However, the reality is, the deficit for this year, before this tax bill takes effect, is more than $600 billion and this tax cut for the rich is likely to make $1 trillion deficits the norm going forward.
What that means is, nothing in this tax bill is likely to become permanent, anyway, which means their desperation to get this piece of shit passed is purely politically motivated. It will explode the deficit and any effect you feel will be very short-term, anyway, so what’s the point?
Also published on Medium.