The 1 Percent Are the Only Winners in the Trump Tax Bill

Rumors and half-truths have been flying around for over six months about the proposed Trump tax bill. The administration assured Americans that the proposed tax bill will be a great improvement to the current tax bill. If you thought the proposed tax bill was bad, it has been confirmed - it is worse than you thought. Unfortunately, the 1% win again and the 99% are the losers. Here is a summary of winners and losers in the Trump tax bill. How to fix it - show your views about the Trump tax bill be voting during the next local, state and presidential elections. 

HEALTH INSURANCE

The health insurance penalty will be removed which will lead to a lower number of people who sign up for health insurance. This will lead to an increase in health insurance premiums for remaining subscribers. In addition, approximately 30 million taxpayers would lose their healthcare coverage due to a reduction in government funding for the Affordable Care Act. Medicaid funding will be reduced by $610 billion.

LOCAL AND STATE TAX

The deduction for local and state taxes will be eliminated. State taxes are not deductible under the alternative minimum tax.

INCOME TAXES

Taxpayers with incomes less than $30,000 would be taxed the most in 2019. Incomes starting at $30,000 will be taxed the least. Taxpayers with incomes of $50,000 or more will receive a tax cut in 2019 and will receive more than $500 extra in their tax refund.

The child tax credit will be increased from $1,000 to $2,000 but wealthy taxpayers benefit the most from the increase.

SOCIAL SERVICE PROGRAMS

Funding to social service programs such as SNAP and TANF that provide food and other benefits for low-income taxpayers and the Pell Grant which provides financial aid for college students would be greatly reduced. Almost $1.2 trillion would be reduced from all these programs.

TAX BRACKETS

The current seven income tax brackets 10%, 15%, 25%, 28%, 33%, 35% or 39.6% would be reduced to four - 12, 25, 35 and 38.5 percent. The new top income tax rate of 38.5% will be for incomes starting at $480,000, an increase from $418,000 for single taxpayers and $1,000,000 for married taxpayers, an increase from $500,000. Most taxpayers would see a 2 percent tax increase. Wealthy taxpayers’ income tax would be reduced by 5 percent.

STANDARD DEDUCTION

The standard deduction will be doubled to $12,700 from $6,350 for a single taxpayer and to $24,800 from $12,400 for married taxpayers. Personal exemptions will be eliminated such as local and state income taxes, casualty losses, and unreimbursed employee expenses.

Homeowners

The homeowner deduction will be limited to $500,000 for first-time mortgages. Mortgages on second homes will no longer be tax deductible. Deduction for interest on home equity debt will be eliminated. There will be a $10,000 cap on the deduction for real estate taxes.

Real Estate

Real estate developers will receive additional tax breaks such as a shorter depreciation schedule. Royalty payments, rental income and licensing fees will get new rates for pass-through income to avoid paying taxes on the money.

ALTERNATIVE MINIMUM TAX

The alternative minimum tax is repealed which will allow wealthy taxpayers to avoid paying a minimum tax.

ESTATE TAX

The estate tax exemption threshold will be increased to estates with less than $11.2 million who will not be taxed.

How the Trump Tax Reform Plan Will Affect You

Everyone cringes when they hear any news about taxes. The tax code has been broken for years and has constantly favored wealthy tax payers. The Trump Tax Reform Plan is no different. To ensure you concerns are heard vote in the upcoming 2018 local election and state elections and write or call your U.S Congressman. Here are nine ways taxpayers would be affected by the Trump tax reform plan.

Healthcare

The Affordable Care Act (ACA) which provided health insurance to an additional 20 million people would be repealed. The new tax bill would eliminate $1.7 trillion from the ACA over the next decade or $1.7 billion per year. Low-income and middle-income taxpayers would be affected the most. Approximately 30 million taxpayers would lose their healthcare coverage. Medicaid would be reduced by $610 billion.

Social Programs

Social programs like TANF and SNAP that provide food and other benefits for low-income taxpayers would be greatly impacted. The Pell Grant that provides financial aid for college students would be reduced. A total of $1.2 trillion would be reduced from all these programs.

Tax Increase

Low-income and middle-income taxpayers would see a tax increase. The current system of seven income tax brackets 10%, 15%, 25%, 28%, 33%, 35% or 39.6% would be reduced to three: 12, 25 and 35 percent. The majority of taxpayers would see a 2 percent increase. Wealthy taxpayers’ income tax would be reduced by 5 percent. The child tax credit and earned income tax credit (EITC) would be reduced by $38.9 billion.

Standard Deduction

Single taxpayers could deduct $12,000, and married couples could deduct $24,000, a $5,600 reduction but both groups would no longer be able to deduct additional exemptions.

Parents

Taxpayers would no longer be able to deduct exemptions for their children. However they could apply for a larger child tax credit up to $1,600 per child.

State and Local Taxes

Taxpayers would no longer be able to deduct income or sales tax and would only be allowed to deduct up to $10,000 in property taxes.

Estates

The estate tax exemption would double. Estates with asset of $11.2 million or less would not be taxed. After six years the estate tax would be eliminated entirely.

Small Businesses

The bill would favor large companies and tax income from smaller companies such as an accountants at individual rates.

Homeowners

The homeowner deduction would be limited to $500,000 for first-time mortgages. Mortgages on second homes would no longer be tax deductible.