Here are 10 family-friendly changes in President Trump’s Tax Reform bill you need to know about. While any of the provisions below could be modified or changed in the final bill, look at what’s proposed:
- Child Tax Credit will be doubled – great for families with kids.
Contrary to what you may have heard, this bill is historic and will help you and your family. Why? Because it cuts taxes at ALL income levels – rich, poor, and middle class. It will result in:
- a 13.6% reduction for those making between $20,000 and $30,000 a year
- a 7.9% reduction for those making $50,000 to $75,000 a year
- a 6.1% reduction for those making $100,000 to $200,000
- a 4.3 % reduction for incomes of $500,000 to $1 million
- a 6.7% reduction for those making more than $1 million
What this means:
- a typical family of four will pay $1,182 less in federal taxes
- a couple making $115,000 will owe $1,130 less to the IRS
According to the Tax Foundation, after-tax income for a typical middle-class family will increase by $2,598 under this plan…
- Adoption Tax Credit will help promote adoptions.
Both the House and Senate have moved to restore the credit for adoptive parents of up to $13,570 of qualified expenses.
Adoption, especially a private one, can be very expensive. Preserving the tax credit can be a major factor in helping families afford adopting.
- Immoral Death Tax – Gone!
Known as the estate tax, it’s levied on an heir’s inherited portion of the assets of an estate that exceeds $5.49 million after the death of both spouses.
For those who inherit businesses, high estate taxes often destroy their ability to keep their business going after the deaths of the owners.
- Businesses no longer forced to pay for birth control/abortion.
Under the Affordable Care Act – also known as Obamacare – employers are forced to include birth control coverage, including abortion, in their health insurance plans… even if they have moral or religious objections to subsidizing the prevention of pregnancy or ending the life of an unborn child.
Some companies such as Hobby Lobby went to court, investing much time and expense to win judgments granting them an exemption from the law’s requirements.
But most small business owners do not have the time or the money to fight the federal government in court.
The GOP tax reform plan eliminates the contraceptive/abortion health insurance mandates.
This doesn’t deny access of these services to any employee who wants them. It merely frees businesses from being forced to subsidize them through their health insurance plans.
- Marriage penalty will be ended or reduced.
The “marriage penalty” refers to
- the difference in the tax brackets between the income of a single taxpayer and the combined income of a married couple
- the phase-out thresholds of certain tax credits and deductions for single taxpayers and married couples filing jointly
The current House and Senate tax reform bills don’t eliminate the marriage penalty entirely, but they reduce it greatly by setting the income thresholds for most marginal tax rates to be twice the amount for married couples as they are for single taxpayers.
- Tax deductions for charitable contributions will be preserved.
While some previous deductible expenses are being eliminated to offset doubling the personal exemption amount and reducing the marginal tax rates, the deduction for charitable contributions will be preserved.
- New jobs will be created.
With the reduction of the corporate income tax rate to 20% (President Trump wanted 15%), companies will be able to expand their operations and hire additional employees.
This will help everyone…especially millennials.
The 2016 top marginal U.S. corporate income tax rate of 38.92% is exceeded only by the United Arab Emirates’ rate of 55 % and Puerto Rico’s rate of 39%.
- Economic boom will produce higher wages
Since the election of Donald Trump last November, the DOW industrial average has increased from 18,250 to over 22,000 – an increase of nearly 4,000 points.
Unemployment has decreased from 4.6% on inauguration day to 4.3% today.
But wages – as measured by average hourly earnings – have remained mostly flat…increasing, but at a slightly lower pace than in the previous year.
When the corporate tax cut actually goes into effect, companies will not only be able to hire additional employees…they will be able to increase wages as well.
- Tax reform will reduce stress of taxpayers
Being able to file their own federal tax return on a single page – or even on a post card – will save time, money and stress for all taxpayers.
- Pastors will no longer be prevented from speaking about political candidates.
You may have heard of the Johnson Amendment. It was proposed by Senator Lyndon B. Johnson on July 2, 1954. It was agreed to without any discussion or debate and was included in the Internal Revenue Code of 1954. It prohibits churches from contributing to political campaigns, and pastors from publicly endorsing or speaking against political candidates.
The GOP tax reform bill would make it legal for pastors and other religious leaders to endorse candidates from the pulpit, but wouldn’t go so far as to allow other political activities such as financial contributions from churches to campaigns.
What do you think? Write me at [email protected]