President Trump’s Tax Proposal: 3 Ways It Could Impact You

tax controversyThe media is abuzz with news about President Donald Trump’s recent tax proposal. President Trump’s chief economic advisor states that the proposal aims to simplify taxes — that the proposal is an attempt to go back to the days when tax instructions consisted of a single page as opposed to the current system that requires 211 pages of instructions for a basic 1040 Form. In addition to simplifying the tax filing process, the proposal could also result in a decrease in tax controversies.

 

A tax proposal like this may seem like another day in the happenings in Washington D.C. with no real impact on our everyday lives. But the changes proposed by the White House would very likely impact every taxpayer throughout the country.

 

How will this proposal impact me? Three specific ways this proposal could impact you include:

 

  • New tax bracket. The current tax system operates on a seven bracket system. This new proposal does away with this system and instead implements a three bracket system. Every taxpayer would fall within one of the three brackets. These three brackets include a 10 percent, 25 percent and 35 percent taxation rate.

  • Changes to deductions. The deduction system is also getting a redo. The proposal sets out to double the deduction for a married couple, allowing the first $24,000 in income to essentially go untaxed.

  • Repeal of Alternative Minimum Tax (AMT). The AMT was instituted in 1969 by Congress in an attempt to help ensure that everyone paid a fair share of taxes. It was intended to impact only the extremely wealthy, but was not set up to adjust for inflation. As noted in a piece in Forbes, this flaw in the system resulted in the AMT burdens unintentionally extending down into the middle class. Those who fell under the purview of this law were required to compute taxes under two different sets of rules: the standard rules and the AMT rules. The taxpayer would then pay whichever was higher. The calculation for the AMT rule eliminates the use of certain deductions, exclusions and credits, often resulting in a higher taxation rate.

 

These are just three elements of the tax proposal. Additional provisions are present, such as a provision that sets out to repeal the death tax.

 

Will this proposal become law? It is unlikely that the proposal in its current state will become law. These proposals are often debated, adjusted and resubmitted in various forms before a law actually goes into effect.  However, the debate highlights the likelihood that tax reform is on the horizon.

 

The attorneys at Robert J. Fedor, Esq., L.L.C. find permanent solutions to complicated tax controversy problems for businesses and individuals throughout the country and worldwide. They keep current on all tax laws and changes.

Clients facing audits, dealing with payroll tax problems or facing possible criminal charges require immediate attention. Contact the tax professionals of Robert J. Fedor, Esq., L.L.C., at 800-579-0997.

Contact Robert J. Fedor, Esq.