Tax Plan Promises To Simplify the Tax System and Reduce Tax For Many American Families

Earlier today, Chairman of the House Ways and Means Committee Kevin Brady unveiled the "Tax Cuts and Jobs Act" that the Republican party hopes to pass into law. According to the Republicans, the bill will deliver "real tax relief to Americans across the country - especially low-and middle-income Americans who have been struggling far too long".

President Trump has been touting his tax reform plan for months. Both President Trump and the Republican party desperately need to pass this bill into law, as their efforts to repeal Obamacare have been unsuccessful so far. The Republican party, with mid-term elections less than a year away, need a victory to take to voters, and tax reform presents their best chance.

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The "Tax Cuts and Jobs Act" has eight major planks:

1. Lower individual tax rates to zero, 12%, 25% and 35%, while maintaining the top 39.6% tax rate.

2. Increases the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.

3. Eliminates "special-interest deductions".

4. Expands and enhances family-focused tax benefits.

5. Establishes a new Family Credit that provides a credit of $300 for each parent and non-child dependent, as well as expanding the current Child Tax Credit to $1,600 from $1,000.

6. Preserves the Child and Dependent Care Tax credit

7. Reduces tax rate on business income to no more than 25%

8. Lowers the corporate tax rate to 20%

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A few other notes:

-the 401k will remain unchanged
-medical expenses not deductible
-student loan interest not deductible
-$10,000 limit deductible for local property taxes
-state and local income tax not deductible
-sales tax not deductible
-mortgage interest deductible up to $500,000, grandfather clause if you have a $500,000-$1 million mortgage

Filed under: General Knowledge