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Published: Tue, May 09, 2017
Economy | By Melissa Porter

Trump tax plan: Relief for his voters but lots of unknowns

Trump tax plan: Relief for his voters but lots of unknowns

The florist has a range of possibilit.

A Washington Post analysis of the tax proposal says Trump's tax plan tries the same thing former presidents Ronald Reagan and George W. Bush attempted over the past four decades.

Far from aiding the economy and paying for itself over time, Trump's tax plan would increase the size of the federal deficit, The NYT editorial board said.

On Wednesday, the administration released a one-page document consisting of 19 bullet points describing how Trump planned to approach tax relief as president.

Almost doubling the standard deduction for married couples, from $12,600 to $24,000. But that's not double. The 40% tax now applies to a $5.5 million inheritance for individuals and $11 million for married couples. The bill immediately reduced income tax rates to 2.5 percent across the board - from as high as 10 percent - and raised the exemption to $2,000 from $600. But if Trump aims to eliminate all individual tax credits, student loan borrowers would no longer get a break on their tax returns. That would change under Trump's proposed plan.

Even with the standard deduction doubling, the average taxpayer may not save much money from the new tax plan. In other words, tycoons would try to structure their incomes to pay not at a 39.6 percent top personal rate but at a 15 percent corporate rate.

However, other common deductions used today in the USA such as deductions for mortgage interest and charitable contributions were not included in the first income tax. But the administration has yet to determine the income levels for people who would be put in each bracket.

For example, it's great that the tax plan promises help with child care costs, a huge burden for low-income families, especially single moms.

Eliminating the Alternative Minimum Tax and the Estate Tax. It has evolved over the years and now impacts about 5 million households, a lot of them making between $200,000 and $1 million a year. That bar is the one Trump would need to beat to enact the "biggest tax cut we've ever had". Many claim the standard deduction every year.

Trump has proposed ending that state and local tax deduction.

Most states have tied their tax codes closely to the federal code.

If your parents' estate is worth less than $10.9 million, you don't have to worry about this tax. The top rate for American corporations - nearly 39 percent, including a 35 percent federal rate and a bit more for the average state rate - is among the highest in the world, according to the Tax Foundation.

Again, without Trump's tax returns, it's impossible to say which breaks in those broad categories he relies on to reduce his taxable business income.

But the true effect of this tax cut will depend on how the Trump administration defines a small business owner. Instead, their profits flow through to the owners, partners and shareholders, who then report and pay tax on them through their individual tax returns.

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