The Biggest Unanswered Question in the Trump Tax Plan
The Trump administration and congressional Republicans released their latest framework for tax reform earlier this week, finally pushing forward a key campaign plank on which the president rallied support during the run-up to the 2016 election. Lawmakers asserted that the move would provide a massive tax cut for Americans across the board. Yet even though the proposal provided some information about what negotiations will look like on Capitol Hill, it left out a key piece of information without which no taxpayer can accurately calculate what their tax liability would be under the new plan.
What the proposal did include was the general layout of how taxes would look for individual taxpayers. Right now, there are seven income tax brackets, with rates ranging from 10% to 39.6% depending on income level. The new proposal reduces the number of brackets to three, and proponents argue that this move is in line with overall efforts to simplify the tax laws and make returns easier to prepare.
The proposal also says what the tax rates for those brackets will be. The lowest tax bracket will be 12%, sparking contention among those who note the apparent inconsistency between aiming tax cuts at ordinary Americans while raising the lowest available bracket. The middle rate of 25% is an amount that currently applies to upper-middle income earners, and the top rate of 35% mimics what Bush-era tax rates were before the legislation's sunset provisions took effect during the Obama administration.
Source: Fool.com
