The Tax Bill Explained

There are many aspects of the recent GOP tax bill that may need further explanation or could be difficult to understand. Indeed, taxes and legislation are very complex, and to the layperson, tax law can be very complicated. That being said, regardless of who you are, if you live in America you may be affected by the tax bill. Here’s a look into what you need to know:

Cutting Taxes for the Wealthiest of Americans

One of the biggest critiques of the tax bill is that it would cut taxes for the wealthiest of Americans, as explained by Citing the Tax Policy Center, Vox reports that in 2027, the richest of Americans–who are those who are earning $5 million per year or more–would get an average cut of about three percent of their income, which is more than $320,000. The top rate that the wealthiest corporations in America pay would also be changed from 35 percent to 20 percent.

Middle class Americans–earning between about $54,000 and $94,000 per year–would also get a little bit of a tax break, but not nearly one as significant as the uber wealthy. People in this income bracket could expect a tax cut of about .5 percent in 2027, or about $360.

Perhaps even more shocking is the fact that while many Americans (like those described above) would have their taxes cut, about a quarter of Americans–and not the wealthy ones!–would actually experience a tax increase. The average tax increase would total more than $2,000.

You would be hard-pressed to find anyone who enjoys doing their taxes, unless perhaps you are a tax accountant or prepare taxes for a living. Many of us average Americans find the endless forms, minuscule writing under the asterisks, deadlines and other exceptions headache inducing.

Adding to the Deficit

Another big problem with the tax bill is that it is expected to add to the federal deficit. In fact, the bill could be so disastrous for the U.S. economy that the country’s debt would increase by trillions of dollars over a 10-year time period. While you may think that the federal deficit will not impact you as and individual, economists don’t think that the bill would generate enough jobs to cover the cost.

So Will the Bill Pass?

The good news, if there is any, is that the bill will likely not pass as written. It would seem that there could still be room for additional negotiations and/or concessions. The GOP will need a simple majority of votes in the Senate to get their bill through. The vote could occur as early as the end of the week after Thanksgiving. If the bill does pass, many believe that President Trump is most likely positioned to benefit.

If you have specific questions and/or concerns regarding how the Tax Bill may impact you, it could be a good idea to request more information from a tax professional. S/he can discuss your particular circumstances and advise you on the best steps to take. However, right now, we need to see which version will pass.