December, 2017
The new tax reform, passed on December 2nd 2017, will take effect on January 1st 2018 and will be applicable to 2019’s filings for the tax year 2018.
The new tax reform, passed on December 2nd 2017, will take effect on January 1st 2018 and will be applicable to 2019’s filings for the tax year 2018.
The reform was passed by only Republican members of Congress, with no Democratic members voting for the new tax bill. Here’s a an overview of how the bill will affect low and avarage income families:
Based on a Forbes.com article, there are some good things in this bill. For example:
1. Increased child tax credits and non-children tax credit.
2. Simpler filing system – simplier forms.
3. Tax cut for smaller sized businesses.
The article did not mention that most of these cuts are temporary parts of the reform and that they cannot go beyond 10 years, without extensions after 10 years, due to Senate rules that prohibits a bill beyond 10 years when the bill increases the deficit. The overall reform bill is already assumed, by the Tax Foundation, to create increased deficit by $400 billion over the next 10 years and the Joint Committee on Taxation is accessing a whopping $1.3 trillion deficit increase as result of this bill.
There may be a few temporary pluses to lower and middle income families in the new tax reform bill but keep in mind the 2009 deficit. It was at $1.4 trillion. Rewind to 2009 and the economic disaster it brought in. That’s the real life scenario of a $1.3-$1.4 trillion deficit. This new tax reform bill is also fraught with perks for the 1% – the most wealthy – such as: removal of the estate tax (rich people kids now get their inheritance tax free) and permanent corporate tax deduction from 35% to 20% (to the delight of big donors and lobbyists).
The reasoning behind this corporate tax cut permanancy, by the Republican Congress, is that big businesses need certainty in order to execute plans that will work long term and the most sneaky aspect of the bill is the destruction of Obamacare is incorporated in it by eliminating the individual mandate of Obamacare.
The average or low income people cheering for this bill, who are not members of Congress that are under pressure to please their donors, are thinking short term and short term only and that’s something people with money, never ever do. They think long term. That’s how they become or remain rich. Unfortunately, lower and average income families and tax payers backing this bill are not getting this larger picture and inevitable long term impact.
Thanks to President Obama, the economy is not in a slow down so why would increased deficit plans be a good idea?
Indeed a very happy holiday gift for big estates and big corporations.
