Will the federal tax cut help your family?
Published 12:02 pm Wednesday, January 10, 2018
There have been some headlines about how great the federal tax cut is and, as well, how horrible it will be for your family. Political leaders from the president to individual congressmen have, depending on their political position, talked loudly and frequently about its greatness or how it will destroy the world as we know it. Yesterday, The Washington Post ran a story that the cut might be a cut if this happens and that happens in the next decade.
Here are some points of the legislation.
Minority leaders Pelosi and Schumer insisted that the bill would give only a small tax cut to the poor and the middle class and a big tax cut to the rich. Considering the fact that the largest group of Americans currently pay no income tax, it would be impossible to reduce no taxes any lower. Only in rare situations will those considered middle class not receive a cut in their taxes. Congresswoman Pelosi and Senator Schumer have misled the public into believing that these citizens will have that tax cut reversed several years from now. That day will never come unless these two regain control of Congress in future elections and reinstate higher taxes.
Their next argument is that the legislation will give greater tax cuts to corporations than to you. While it is true that a big part of the tax cut does go to corporations, what they seem to forget is these are companies that hire you and your neighbors. Reduction in taxes for them leads to greater wages and stimulates growth that requires hiring more employees. This is the purpose of the legislation. The goal is to have more people working and providing for their families rather than receiving government benefits.
Here are a few of the changes that will benefit you.
Couples making less than $18,000 will pay no income tax. Every group earning more than that will owe less than they currently owe.
Standard deductions will be doubled. The current standard deduction is $12,000; in 2018 it will be $24,000. Unless you buy a new house valued at more than $750,000, you can still deduct mortgage interest.
Medical expenses which were to be deductible only after 10 percent of income this year will, instead, return to the rate of more than 7.5 percent that will be deductible.
I encourage you to ignore the questionable stories and arguments that you hear in the news media and, instead, compare your tax return to the new rates. In most cases, unless there are very unusual circumstances, families will find that they will be better off under the tax code in the legislation that was passed and signed into law by the president. Starting in February, no matter what you will do with these additional dollars in your paycheck, it will help the economy. Some may spend it all, others will save much of that larger paycheck. Either way, it will improve the economy. Spending increases create new jobs immediately, while savings increases provide more money banks will have to loan.
Likewise, corporations that return profits from overseas operations will use that money for hiring more employees, investing in new capital assets or returning greater profits to current employees or stockholders. Each of these options will enhance the American economy and help our nation grow and advance.
Frank Ruff represents Charlotte County in the state senate. His email address is Sen.Ruff@ verizon.net.