Tax reform looms: how it could impact your wallet
PADUCAH, KY – Any minute now, the Unites States Senate could vote to overhaul the tax system. Early Friday, Senate Majority Leader Mitch McConnell signaled that he had enough votes to get the bill over the finish line. As of now, the only Republican senator we’ve confirmed as a “no” vote is Tennessee Sen. Bob Corker. That puts McConnell at 51 votes.
If it passes, many people could see tax relief, at least for a few years. It would nearly double the standard deduction for single and married taxpayers. It would also double the $1,000 child credit.
The non-partisan Congressional Budget Office projects the government will get more money out of (or spend less on) lower income people. Specifically, the government would see gains in those earning fewer than $30,000.
People earning more than that will likely pay less and have more money in their pockets.
If you’re a multi-million dollar, or billion dollar corporation, you’ll see a lot of tax relief. The corporate tax rate is expected to go from 35 percent to 20 percent if this passes.
Local Certified Public Accountant John Alicks thinks the tax break on the wealthy is for the greater good. “I think you have to realize who is creating jobs, who is driving that engine. It’s not poor people,” he said.
A Bank of America study actually found 35 percent of companies would use a surplus from taxes to create jobs. A CNBC study finds most will buy back stock.
The GOP has a plan that would combat corporate greed. This plan, as written at this point, would require companies to pay a one-time low tax rate on existing profit. That’s set at 10 percent for cash assets and 5 percent on non-cash assets.
The Congressional Budget Office estimates the plan could add $1.4 trillion to the national deficit. Tax breaks would obviously mean less money coming in. But, Alicks thinks this will stimulate the economy, putting more money in the pot in the long run. “I’ve been practicing in it since 1976. Out tax system is a disaster. To overhaul it and simplify it, that’s a cheap price to pay,” he added.
For the teachers out there who spend their personal money on school supplies for their students, rather than a deduction cap of $250, this would extend it to $500.
A final thing to keep an eye on as the Senate’s decision looms, is S.A.L.T. Not the kind on your dinner table. It’s short for state and local tax deductions. Many of us, especially in states like Kentucky, Missouri, and Illinois, with state income taxes utilize that deduction to save on federal taxes. At the moment, this ends that option.