The White House released an outline for a new tax plan on Wednesday, a one-page document that managed to be simultaneously dramatic and vague. The plan would (unsurprisingly) be a boon to corporations, but let's set them aside for a moment. Here's how Trump's tax plan will affect families, by income bracket, because that's what matters most. Big tax cuts for businesses are supposed to create jobs and economic growth and help people in the long run, but trickle-down economics didn't work for Reagan or Bush, and it's not going to work for Trump, either. This, too, shouldn't shock anyone; it's an open secret that Trump is actually really bad with money.
The single-page tax plan, overly formatted with italics, boldface, and bullet points to the point where it resembles a badly-designed resume, is heavy on slogans and light on details. "The Biggest Individual And Business Tax Cut In American History," proclaims the subtitle. One wonders whether there was a behind-the-scenes disagreement over whether to include an exclamation point. It promises to provide tax relief for all — "especially middle-income families" — without explaining how exactly it will do that, or how the country could afford an estimated $6 trillion increase to the national debt that it would cause.
One of the most sweeping changes would be to the tax brackets themselves. Currently, there are seven: 10, 15, 25, 28, 33, 35, and 39.6 percent. The income thresholds vary depending on filing status (single, married filing jointly, or head of household). Trump's plan would reduce the brackets to just three: 10, 25, and 35 percent. It does not define the income limits for each bracket, though, so it's impossible to tell whether someone currently paying 15 percent would drop down to 10, or increase to 25. We also don't know whether those in the 28 and 33 percent brackets — by definition, middle-income earners — would pay more or less. All we know for sure is that those in the top bracket, currently defined as those making more than $418,400 per year, would definitely get a break. Great news for Trump, his family, and his Cabinet! But what about the rest of the country?
Trump's plan calls for doubling the standard deduction, which is currently $6,350 for single people and $12,700 for married couples. This means that a single parent making up to $12,700, or a couple making $25,400, would no longer owe taxes. That's good! It also promises to simplify tax filing, so those who can't afford to shell out a couple hundred dollars for an accountant every year would have an easier time filling out those forms. We're off to a great start.
If you were paying 28 or 33 percent before, you might be dropping down to this bracket, theoretically saving you anywhere from about $2,000 to $30,000 per year, because the government definitely doesn't need that money to build a wall or fund PBS or pay its debt to China. There's also a new child care credit planned. Not the old one, which would have cost middle-income families up to $2,500 per year. This one will actually save you money. How much? Up to $20 per year, according to Slate. Thanks, Ivanka!
If you're half of a married couple earning $470,000 per year, congratulations! You now get to keep an additional $20,000, which will come in handy when you want to buy your kid a new car, or gift them with a down payment on a home. The alternative minimum tax will also be eliminated, so you can deduct and deduct until you don't pay a dime, which makes you smart. And if you and your spouse earn more than $250,000 per year on your investments, you no longer have to pay that 3.8 percent tax that funded Obamacare, which, in some cases, meant paying for vaccinations for poor children. And when you die, if you leave your kids $5.5 million (or $11 million for a couple), they no longer have to pay taxes on that.