Part 1: What does it mean to you? The GOP's tax proposal

Part 1: What does it mean to you? The GOP's tax proposal 

Bottom Line: The GOP's tax proposal is still a far cry from a flat tax without deductions (my preferred tax code) but it is simpler and regardless of what you might hear otherwise - it does reduce taxes for all Americans while shifting still more of the burden to upper income earners than currently exists. First here are the changes to the brackets: 

Current: 10%, 15%, 25%, 28%, 33%, 35%, 39.6% 

Standard deduction: $6,350  

Proposed: 12%, 25%, 35%, 39.6% 

Standard deduction: $12,200 

For the ease of conversation, I'm going to compare individual income with the standard deductions to provide you with how this would work currently and going forward. If you earn:  

$25,000 

Current code: $2,331 

Proposed code: $1,536 

Savings: $795 

$50,000 

Current code: $6,651 

Proposed code: $4,536 

Savings: $2115  

$75,000 

Current code: $12,901 

Proposed code: $9,850 

Savings: $3051 

So demonstrably the GOP proposed tax plan provides meaningful tax relief for the "middle-class" by any definition. Any argument to the contrary is incorrect and a demonstrable lie.  

One more non-middle class related example. Currently the top tax rate of 39.6% kicks in for married couples filing jointly at $470,700. So, what would that couple pay today vs the new proposed code? 

Current code: $127,183 

Proposed code: $103,645 

Savings: $23,538 

In other words, everyone benefits meaningfully prior to arriving at the top tax code of 39.6%. This in turn shifts the burden further towards upper income earners.  

 

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