Tax Reform and the Middle Class

Tax Reform and the Middle Class

It looks as though Trump’s tax cut proposals could provide some relief to the lower and middle class; initial consensus concedes to this.

The bigger issue, however, is that these cuts will benefit those who sit atop the income pyramid considerably more, and not just in absolute terms. Further extinguishing any hopeful enthusiasm for this plan is that there will actually be a swath of people, mostly from the professional class, who will actually see their taxes increase. The following is an overview from an analysis conducted by a Washington based think tank, the Urban-Brookings Tax Policy Center.

To begin, let’s get the worst of the news out of the way and look at the group that will suffer the most. Sorry to say, but if you are a filer who has a combined yearly income of between $150,000 to $300,000, in ten year’s time you will be paying more in taxes than you do at the present.  This increase in your tax liability is mostly attributable to a slashing of deductibles, most importantly those that deal with state and local taxes.  

Those earning $25,000 and under a year will experience a meager half-a-percent increase in money after the first year of this plan, which equates to a ludicrous sixty dollars.  The benefit gained from this proposal makes a giant leap to a year-end boost of $660 if you make between $48,000 and $86,000 annually.  While it may be true that every dollar spared from the tax-man helps, this certainly isn’t the help most need.  

Now that the disappointing aspects of the plan have been aired, we can resume a more cheerful tone for the biggest winners.  For filers who claim over $730,000 in yearly income, their post-tax income would rise approximately eight and a half percent, or by roughly $130,000.  The upside extends for people who bring in at least $5 million yearly, ultimately resulting in an after-tax gain of ten percent.  

If the Urban-Brookings Tax Policy Center is to be trusted, it looks like there will be little to celebrate amongst the bottom ninety-five percent.  However, the Tax Policy Center did temper their initial assessment by stating they did not factor in how the tax proposals would impact overall economic growth, which could have a marked long-term impact to the benefit of all tax-brackets over the next decade.  

For more information, please read:
Is the Trump tax plan a big win for middle class? Not so much | CNN

 

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