President Donald Trump’s economic adviser is pushing back against the suggestion that the administration’s tax plan could benefit the wealthy. (Sept. 28)
Clarification: This story has been updated to indicate that the chart referenced is from the donaldjtrump.com website in December 2016 and is different from the updated GOP tax proposal released in late September.
President Donald Trump’s tax plan, introduced during the campaign and outlined in more detail in late September, aims to “reduce taxes across the board.” But how exactly will it impact you? Will your taxes actually end up lower?
Howmuch.net, a cost information website, created a handy infographic to help answer that question earlier this year.
As you’ll see in the chart below, created from Trump campaign information in December 2016, the GOP tax plan is a simplification. At the time, Trump wanted to reduce the number of individual tax bands from seven to three: 12%, 25% and 33%.
“But simplifying is not necessarily the same as reducing taxes,” the cost information site explains.
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“Some taxpayers would definitely benefit from Trump’s tax reform — especially those at the higher end of the income scale. There are others, however, who would see their tax rates go up. Especially those on lower incomes.”
Howmuch.net also notes that “the graph does not take into account other aspects of the Trump tax plan not directly related to the changes to income tax bands, such as the increase of standard deductions and a cap on itemized deductions, although, of course, these would also have an impact on net incomes.”
CNBC’s John Harwood calls Trump’s tax reform a “remarkable paradox,” as middle America may not benefit as much as coastal elites.
While it’s still hard to know exactly how Trump’s final tax reform proposal will play out, financial advisers are encouraging clients to start preparing today for any changes that may be on the horizon.
“Don’t overreact or make any plans based off of something that isn’t law, but still be aware of the changes that are being proposed,” Garrett Oakley, CFP at Betterment, tells CNBC Make It. “Have a game plan if it does go through, but don’t pull the trigger until it’s official. It’s a slow process to have a tax plan go into effect.”
Check out the full report on Howmuch.net.
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Unveiling a new sweeping tax plan, U.S. President Donald Trump says it will benefit middle class workers the most and simplify the tax code. (Sept. 27)
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