from an upper middle class household, with two wage earners, and a mortgage.
Doubling the standard deduction probably does not help most people who itemize. It certainly will not help people like us with a lot of itemized deductions, especially if key deductions are eliminated.
Neither of us has a 403B (the public employee equivalent of a 401K) so we are not directly affected by the possibility that deductibility of contributions to that could be eliminated, but many in our tax brackets will be, especially those who do not have defined benefit pension plans, which my wife still does and which if I teach in a public school system other than in Maryland from which I am retired I will again.
While we do not know what the income levels for the proposed three brackets will be, it is probably we would see our bracket lowered from 28% to 25%, but even that combined with doubling standard deduction would probably not save us money because of the elimination of deductibility of state and local taxes (which currently are either income or sales, but not both). We are in a 5.75% Virginia tax bracket on each additional dollar earned.
It is not clear whether limitation of mortgage interest deductibility would affect us or not. It would affect many people we know.
But that is not my objection to this proposal.
The cutting of the nominal corporate tax rate by more than half is ridiculous. Yes, there are some smaller business that get clobbered by the current 35% rate, but most major corporations pay little if any federal income taxes. A 25% rate and an elimination of some of the more egregious deductions available to corporations is a far better approach, and one that would get Democratic support.
The elimination of the inheritance tax, which currently affects a miniscule proportion of taxpayers (but obviously would affect Trump and many of the very wealthy in his cabinet) is something I can say with confidence would have horrified the Founders, who had a clear antipathy towards inherited wealth and the influence it could wield.
The idea of a 15% pass through so that wealthy individuals could reframe their finances as LLCs and pay a corporate rather than an individual rate is once again distorting the tax system on behalf of the wealthy who do not need additional assistance.
The idea of allowing corporations to repatriate overseas profits in the trillions while paying 15% or less on those profits is an abomination. Set the corporate tax rate at 25%, and allow no deductions on repatriation.
Most of all,elimination of the AMT directly benefits the likes of Trump, as we know from his 2005 federal return, where almost all of the taxes he paid were because of it, otherwise his effective tax rate would have been around 5%. Rather than eliminate the AMT, what we should be doing is eliminating the special breaks real estate folks get that helped Trump avoid paying taxes for many years.
The one hope is that there are fiscal conservatives who are outraged by the hole this set of proposals would blow in budgets, expanding the deficit even by conservative estimates by several trillion dollars. But then again, we know that Trump on a personal level has apparently never cared about debts. He defaults on some, refusing to pay businesses who have provided services to his companies. He apparently handles others by getting money from Russian and Chinese interests, perhaps by their overpaying for condos in his properties??? We do have some evidence of that.
This administration has already clearly demonstrated that Trump’s primary motivation is to enrich himself and his family. Now we are seeing the others in positions of power in the administration advocating for policies that enrich them and their interests.
Trump apparently has learned from his buddy Putin how to use the government to rip off the public purse on behalf of private interests.
And keep your eyes open, because he wants to privatize as much as he can of public properties (eg, monuments) in order to further enrich his buddies and possibly himself.
His tax proposal is worse than a joke.
It is a blueprint for creating a system even more like the economic system of Russia.