The single page long tax plan envisaged by the Trump administration could hurt families belonging to the upper middle class strata. Analysts predict that people living in Republican states will be affected more. The tax plan will benefit only the wealthiest of Americans. According to Robertson Williams of Urban-Brookings Tax Policy Center, a few bullet points cannot be written to create a tax plan.
The Trump administration proudly proclaimed its increase of standard deduction- up to a ceiling of $24,000 for any married couple who file jointly. This would result in fewer taxpayers itemizing their tax returns. This is notable as across all the income groups, approximately 30 percent of all the taxpayers presently itemize returns. This number, however, rises markedly with income. Almost 60 percent of the taxpayers who have incomes anywhere from $75,000 to $100,000 itemize. According to Tax Foundation, this number goes up to almost 80 percent for individuals earning any amount from $100,000 to $200,000.
Tax experts understand there is no point in making projections or Americans trying to plan their personal financial futures sans any detailed description of the portions of tax code that may change. To give an example, the economic team chosen by Trump announced its intention of substituting present tax brackets with only three- at 10 percent, 25 percent and 35 percent. The team, however, did not provide any income details on this particular matter.
A few tax experts are of the opinion that a household enjoying $100,000 in yearly income could lose out in the new economic dispensation. Marshall Steinbaum of Roosevelt Institute said that the kind of people who earns this amount of money certainly works to earn his bread. The fellow and senior economist said that such an income is made from labor-and not from investments. That's where the problem with Trump's tax plan lies. The Trump administration's plans are tilted towards easing tax burdens on investment and business income.
For the rich
Steinbaum's opinions are echoed by other tax experts like Jacob Kirkegaard of Peterson Institute for International Economics. He further added that there is no doubt that Trump's tax plan will benefit most the people in the same economic strata as Donald Trump.
Trump's tax scheme may not help taxpayers who reside in states with high local and state taxes. At present, taxpayers in the top income quintile's botton half, enjoying a median income of $129,000 pays almost 11 percent in local and state taxes as percentage of income. The plan by Trump will eliminate all the deductions, except charitable donations and the mortgage interest.