While it has only been a few weeks since the election, there seems to be a growing separation between the promises of candidate Trump, and the proposals of President-elect Trump.
Back in October, candidate Donald Trump was the champion of the middle class as he looked for votes in Pennsylvania and Michigan. His contract for the American Voter assured the electorate that “the largest tax reductions are for the middle class. A middle-class family with 2 children will get a 35% tax cut.”
That was then. Now, independent analysis of President-elect Trump’s tax proposal from the nonpartisan Tax Policy Center tends to suggest his changes would modestly cut income taxes for most middle-class Americans, but would increase them for millions of families in the middle-class.
Get ready for the battle of minutia where experts position the center of the discussion over what is a middle class family, and whether a normal family has 1 parent or 2 with childcare expenses or not.
Lily Batchelder, a former deputy director of President Barack Obama’s National Economic Council, says “millions of middle-class working families will see their tax bills rise under Trump’s plan.” She is likely right, particularly for single-parent families.
Steve Calk, an economic adviser on Team Trump, says “Take a family earning $50,000 a year, and their child-care costs are $7,000 or $8,000 a year. They’re going to save 35 percent on their net tax bracket.” He may be right, but if that family doesn’t have any child-care costs, their taxes will rise by roughly $150.
In general, your taxes will likely rise if you itemize. In the past, the total adjustment to income was a combination of itemized deductions and the exemptions. Fewer taxpayers will have the deductions necessary to justify itemizing their deductions.
In the case of my 2016 taxes, my itemized deductions plus my exemptions should approach $34,000, where the exemptions provided a baseline of roughly $16,000.
Under Trump’s tax plan, I would only get a standard deduction of $30,000 because I am losing my exemptions, and $18,000 of deduction isn’t enough to justify filing the Schedule A. In total fewer people will have the finances to justify itemizing against the combined threshold.
The taxes of single parents and large families would likely rise as a result of the removal of the personal exemption and the head-of-household filing status.
Families with 2 children making less than $48,000 will see higher taxes as they lose their 10 percent tax bracket.
In all fairness, Trump’s statement “A middle-class family with 2 children will get a 35% tax cut” may refer to a specific family somewhere in America that has child-care expenses. It certainly isn’t connected to the broader base of America.
Any opinions presented in the article represent those of the author alone.
For more information:
- NPR’s Article : “Who Benefits From Donald Trump’s Tax Plan?”
- AP’s Big Story: “For some in middle class, Trump plan would mean tax increase”
- Tax Policy Center’s: “An Analysis of Donald Trump’s Revised Tax Plan”