Archive | September, 2017

Tax Cuts/Reform/Simplification? A Few Questions, Please

28 Sep

I have a few questions. 

1. Why does the average taxpayer care how many tax brackets there are?  How difficult is it, really, to look up and do the arithmetic required to calculate how much tax is owed on a certain taxable income?

2. They want to eliminate the Alternative Minimum Tax – What percent of the American middle class winds up paying the Alternative Minimum Tax on a regular basis?  This seems more like a gift to the upper income folks. 

3.  They want to double the standard deduction, but at the same time they want to delete the $4000/person exemption and reduce what we can deduct when we itemize — maybe down to just mortgage interest and charitable contributions?  So what becomes of the other major deductions — medical out-of-pocket, state income tax, and personal property/real estate taxes?  These can be significant amounts, and I must believe are regularly used by (or on an emergency basis, or by the elderly, in the case of medical deductions) millions of middle class taxpayers.   

If these itemized deductions are removed from the tax code, and exemptions are eliminated (leaving just a $2000 net increase per person in the Standard Deduction – more like a 33% net increase in per-person deductions rather than a doubling), I can devise endless examples of how “common people” will have their taxes actually go up, in spite of the doubling of the Standard Deduction. 

I guess we have to find out specifically what changes are proposed to the middle income tax RATES, because without further information, two of the three tax returns I prepare for people may well show increased taxes due.