With a vote on the tax bill coming this week, we want to make sure you understand many of the intricacies of the bill. This tax plan will impact you, and unless you are in the top 1% of earners in the country, it will likely have a negative impact.
Where Does the National Budget Come From Anyway?
Personal income tax accounts for the largest segment of the national budget. We, individuals, contribute 49% of the total federal budget. Another 31% come from payroll taxes from both employer and employee taxes. 11% of the budget comes from corporate taxes.
With individuals funding well over half of the national budget, there is no reason why we should also be paying to reduce taxes on the corporations.
What Would Happen to My Base Tax Rate if the bill passes?
In the short term, some households in the middle and lower earning brackets would see a small increase in their take-home pay. Again this would expire by 2027, and raise the national debt. But the lowest earning families, those living under the poverty line, would see a 2% increase in their taxes! A family making $37k would pay the same rate as a family making $91k, and billionaires would be taxed the same as someone making $418k. If you look at the 35% tax bracket, it doesn’t even make sense.
It’s Not Just Your Base Tax Bracket that’s Affected
- Alimony payments would no longer be tax-deductible
- Capital Gains exemptions are reduced if it wasn’t your primary residence for 5 of the last 8 years
- Medical Expenses will no longer be deductible, which will disproportionately penalize the elderly and health-compromised
- Nearly 1 million homes affordable to low-income families, seniors and veterans are at risk. Over 19 million families nationwide already spend more than half of their income each month on housing.
- Reduces property tax deduction to a max of $10k
- Eliminates Teacher’s Supplies deduction of $250
- Eliminates deductions for student loan interest paid
- Eliminated deductions for mortgage interest paid
- Eliminates deductions for last year’s tax preparation
- Eliminates deductions for state and local income tax paid, affecting 40 million families for a combined total of 350 billion dollars.
- Eliminates employer contributed child care deductions
- The bill even contains language defining “personage”, which many fear will be used in the future to limit reproductive choice.
- Starting in 2019, the bill would further cut business taxes, increasing the burden on individuals and the national debt. Unlike the personal income taxes, the business tax cuts would NOT expire.