In­creased taxes for mid­dle class fam­i­lies?

GA Voice - - Outspoken -

This is a time of un­cer­tainty for all of us. Be­ing proac­tive is key in th­ese times. We know the tax law as it stands, and have some clue as to how it may change in the next four years.

Sev­eral of the pro­posed changes in­clude cut­ting the tax brack­ets from seven down to three, lim­it­ing item­ized de­duc­tions for high in­come tax­pay­ers, elim­i­nat­ing per­sonal ex­emp­tions and elim­i­nat­ing the alternative min­i­mum tax (AMT) and the ad­di­tional Medi­care tax. There are pros and cons to all of th­ese pro­posed changes and there is go­ing to be much de­bate about how they will change the tax sit­u­a­tion of Amer­i­cans and the mar­ket in gen­eral.

Un­der the three tax brack­ets, those with a tax­able in­come be­tween $0 and $37,500 ($0 to $75,000 for mar­ried fil­ers) would be sub­ject to a 12 per­cent tax rate; tax­able in­come be­tween $37,500 to $112,500 (or $75,000 to $225,000 for mar­ried fil­ers) would be sub­ject to a 25 per­cent rate. Those with tax-

Fe­bru­ary 17, 2017

able in­come above $112,500 ($225,000+ for mar­ried fil­ers) would be sub­ject to a 33 per­cent fed­eral tax rate.

Item­ized de­duc­tions for the wealth­i­est Amer­i­cans would be capped at $100,000 for sin­gle fil­ers, and twice that for those who are mar­ried. This means that wealthy cou­ples who want to give a mil­lion dol­lars to char­ity would only be able to deduct a fifth of that ver­sus the cur­rent 39 per­cent.

Two changes in the plan could in­crease taxes for many mid­dle class fam­i­lies.

First, it elim­i­nates per­sonal ex­emp­tions, which are about $4,000 for in­di­vid­u­als and each of their chil­dren or de­pen­dents. Se­cond, it elim­i­nates the “head of house­hold” tax fil­ing sta­tus that’s typ­i­cally used by sin­gle par­ents. So, mil­lions of fam­i­lies with many kids – and sin­gle par­ents – could end up with higher taxes un­der Pres­i­dent Trump’s pro­posal, ac­cord­ing to an anal­y­sis by Lily Batchelder of the New York Univer­sity School of Law.

The plan would elim­i­nate the 3.8 per­cent tax on net in­vest­ment in­come on peo­ple with in­comes (MAGI) of over $200,000 for

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