For many of us, passing a tax reform bill is much easier than Congress pretends it to be. Many in Congress want you to believe that it is very complex. They do this because it benefits the people in power such as lobbyists, lawyers,accountants,big corporations, Big Government and themselves. They have a better chance of controlling your money. This is your country and we are a nation governed by its people, so let's make the laws work for us.
Many people voted for Donald Trump in order to receive simplified tax reform. He has an excellent tax plan and I will summarize it with a few changes and recommendations that I believe will make it more likely to pass in Congress.
With respect to individual taxes :
1. Simplify tax brackets down to three brackets. 12% for singles with incomes over $37,500 and married joint filings with incomes over $75,000. 25% for those singles with incomes over $37,500 up to $112,500 and married joint filings would be between $75,000 and $225,000. 33% for those singles with income is over $112,500 and married joint filings over $225,000. I agree with these three brackets proposed by president Trump but would change the percentages to 11%, 22%, and 35% in order to help the middle class more and make it more acceptable for the Senate Democrats, of which at least 8 of their votes are needed for passage of the bill.
2. Increase the standard deduction as per President Trump's plan which essentially doubles the deduction for singles ($12,600) and married couples ($24,000).This also helps the middle class who may not have as many itemized deductions.
3. Eliminate all deductions except for those on retirement savings, charitable contributions, and mortgage interest on only one home at a time. This way those who can afford more than one home at a time will not receive a mortgage interest deduction on additional homes. President Trump's plan caps charitable deduction at $200,000. I believe that charitable deductions can continue over $200,000 at up to 10% of income over $2 million. In this way, the rich have an incentive to continue donating to charity. Continue retirement savings as before.
5. Allow child and elder care deductions similar to the one outlined in President Trump's plan with $2000 a year for each child under age 13 and $5000 a year for each dependent elder. Singles earning over $250,000 and married couples over $500,000 do not qualify for these deductions.
4. Eliminate the estate tax. It hurts small businesses and should not be taxed since the money has already been taxed at least once and sometimes more.
5. Eliminate the alternative minimum tax and state and local deductions.
6. Continue the Social Security and Medicare taxes.
This will allow about 80% of the 160 million individual tax filers to file with a simple form and they will no longer need to use an accountant. There will be some individuals who have an individual corporation or business and may also need to file a corporate tax form, but they too benefit from a simplified individual tax form. The overall work of the IRS will be cut significantly and we can then greatly decrease the size of the IRS.
With respect to corporate taxes :
1. Decrease the corporate tax from 35% to 15%.
2. Allow a one time repatriation tax of 10% for businesses with income earned abroad. This would help keep companies in the United States and get many corporations to bring back money to the United States. Many of these corporations will come back because of the lower corporate tax rate.
3. Allow US based manufacturers to deduct all expenses for new plants and equipment. This incentivizes companies to invest more.
4. Illuminate loopholes that allow corporations to avoid taxes by setting up offshore businesses.
5. Obtain revenue with an import tax which is graduated as follows:
0% for items under $5,000.
10% for items between $5000 and $10,000.
15% for items between $10,000 and 20,000.
20% for items over $20,000.
This is similar to a luxury tax except that it is on imports only. If Congress does not want to have any change in the import taxes, then the corporate tax will need to be 20% to be more likely revenue neutral.
With respect to capital gains tax :
1. Decrease the capital gains taxes from 20% to 15%, which allows Americans to either reinvest or spend more; thus,stimulating business and improving the economy.
By passing a simplified Tax Bill, the American people can have a tax code that is under 1000 pages rather than the current 75,000 pages. Really Congress ?? no more excuses, giving us tax reform. It's is as easy as 1-2-3 tax brackets .
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