Good Question: How does tax reform help me?
Tax reform: Those two words can make a person’s eyes glaze over in two seconds. However, if lawmakers in Washington, D.C. can work together to pass tax reform legislation, you might benefit. The emphasis, of course, is on the word if.
However, Senate Majority Leader Mitch McConnell appears optimistic. That’s what the Republican senator from Kentucky recently told me when I interviewed him just days after the start of the September session. McConnell said the focus needs to be on reducing the taxes American corporations are forced to pay. He said that has a domino effect for the average American worker.
“To change the corporate tax structure, so we quit exporting jobs to other countries. We want to keep those jobs in America. All of that is related to our current, highly deficient, tax structure,” McConnell said.
Some lawmakers argue high taxes force U.S. companies to move operations overseas. Lowering those rates would keep companies here and lead to job creation.
McConnell’s fellow Kentucky Republican senator, Sen. Rand Paul, agrees with him.
“Yeah, I think there’s a very good chance we’ll get some lower rates, and we need to to try and keep American jobs in our country,” Paul said. “We need lower rates.”
Other lawmakers disagree, saying low tax rates just line the pockets of big corporations and have an effect on job creation.
Time will tell, as lawmakers still need to work with President Donald Trump and his recommendations on tax reform. Trump’s plan calls for a reduction in the number of tax brackets in the federal income tax system from seven to three.
Which bracket you end up in and the amount of taxes you pay depends on your income. One example, under Trump’s proposal, is if your household income is between $48,000 and $83,000, you’d save an average of $1,000 a year.