The following is an excerpt from John W. Schoen | April 26, 2017 | Yahoo.com |
The question of whether you'll be paying more in taxes under President Donald Trump may hinge on how much you use tax deductions now.
The Trump administration Wednesday unveiled the broad outlines of his campaign promise to overhaul the sprawling U.S. tax code with a simpler system that lowers tax rates. But even as those rates come down, closing loopholes and eliminating popular deductions will expose more of the average household's income to taxes.
It remains to be seen how deeply the plan cuts into the most widely used deductions, which cost the government hundreds of billions of dollars in lower taxes.
"We are going to move this as fast as we can and when we have an agreement (with Congress), we will release the details," said Treasury Secretary Steven Mnuchin .
One of the critical questions the plan will have to address is whether the elimination of tax breaks will make up for revenues lost from lowering tax rates.
Mnuchin repeated the administration's pledge that the proposal "will pay for itself" over time as the economy grows and the tax base widens.
For individuals, the Trump administration is proposing cutting the number of personal income tax rates from seven to just three brackets: 10 percent, 25 percent and 35 percent. The plan also proposed increasing the standard deduction, effectively eliminating taxes on the first $24,000 of a couple's income. The estate tax and alternative minimum tax would also be eliminated, along with a 3.8 percent investment tax imposed under the Affordable Care Act. National Economic Council Director Gary Cohn told reporters that "homeownership, charitable giving and retirement savings will be protected, but other tax benefits will be eliminated."
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