Is There Really A Winner?
Middle Class Appears to be Worse Off
Despite the promises of the House Republicans to help the middle class with their new tax plan, the initial proposals seem to have a different benefactor. Although the new tax plan really depends on each taxpayer's unique situation there are new changes to the tax code that project to hurt families that rely on much of the tax deductions and credits currently being eliminated in the new proposed tax code.
The main benefactors under the new proposed changes are corporations and America's top one-percent. Although the middle class does realize tax cuts, they are only a fraction of what the highest income bracket receives. In order to stimulate our economy the number one push for tax cuts should be for the majority of our population, the middle class. By reducing the taxes of the majority of the U.S., we enable spending, which would help our economy grow. I think there are many reasons that the projections show a rather steep beneficial tax break for the one-percent, and they are due to the elimination of certain deductions under the new proposal.
Drastic Changes with Deductions/Exemptions
Perhaps the most prominent changes under the new proposal are the elimination of the personal exemptions and the steep increase of the standard deduction. Essentially, under these changes families with four or more children will end up paying more taxes because their increased standard deduction is less than the effect of using four personal exemptions. Also, this increase hurts taxpayers that take itemized deductions greater than the new standard deduction because they would have originally been able to take the itemized deduction, in addition to the personal exemptions, but now will lose the deductions of their personal exemptions.
There are also eliminations of student loan interest deductions and medical expense deductions, which will hurt family's struggling to pay college tuition and medical bills. Ultimately, with these eliminations any family with a college student or ill family member will be affected. That is something that is troubling to see, since a majority of American's use one, if not both of these deductions to their advantage.
My Perspective
After reading this article I was shocked to see how negatively the changes would affect my life personally. After months of hearing promises of how a family in the middle-class like mine would welcome the changes, I am confused because the changes I see will do the opposite. As one of four children in a middle-class family, and being a college student, my family and I will surely have an increased tax liability due to the eliminations in deductions under the new proposed code. It was troubling to see that corporations and the richest one-percent will benefit from massive tax cuts that the middle-class will only realize a fraction of.
As an aspiring CPA and tax associate, these changes are going to affect the way I do my future job, and are related to what I am currently learning. It is cool to have the knowledge and interest in a current event that is taking place in our society today.
