Tax Plan’s Impact a Mystery for Middle Class, but not for Trump

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(NBC News) — Who are the winners and losers in the new Republican tax plan?

For the middle class in particular, it’s hard to tell.

Experts say the net effects on lower- and middle-income Americans are hard to determine, while the potential gains for ultra-wealthy Americans and businesses are larger and more concrete. Here’s a look at the key provisions of President Donald Trump’s proposals.

How will an average family fare?
For individuals, the plan collapses the tax brackets from seven rates into just three: 12 percent, 25 percent and 35 percent. The bottom rate would go up from 10 percent, the top would go down from 39.6 percent.

It appears to get rid of most deductions, explicitly keeping only those on mortgage interest and charitable donations, while raising the standard deduction most filers take to $12,000 for single filers (up from $6,350) and $24,000 for married couples (up from $12,700).

The most controversial deduction that’s gone is for state and local taxes, which would disproportionately affect filers in states with higher taxes like New York, New Jersey and California. The deduction provides the most benefit to upper-middle-class and wealthy income filers, who could see their taxes go up as a result under the Trump/GOP plan.

On paper, the biggest beneficiaries of the individual changes are low- and middle-income single filers and childless couples who would see more earnings covered by the higher standard deduction. But some families might see a tax increase, since the proposal eliminates the personal exemption that filers currently claim for each taxpayer and dependent. Senior citizens and the blind currently also receive an additional deduction that could be affected by the proposal.

“Based on the details of the plan that have been released, a married couple with two kids earning [under] $79,583 a year would pay more under the Trump plan than under existing law,” said Daniel Hemel, an assistant professor of law at the University of Chicago.

But judging exactly how the changes affect people is hard, based on the available info.

The left-leaning Center on Budget and Policy Priorities concluded in a preliminary analysis that “the end result would likely be close to a wash for many low- and middle-income families,” but said that it was hard to get more specific without additional information on how pieces like a new child tax credit would work.

Notably, the Trump proposal doesn’t say which incomes fall into which brackets. And while wonks are assuming that any deduction or exemption not mentioned is cut, they won’t know for sure until there’s a more detailed plan or bill.

Read the full story on NBC’s website here

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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