While it’s true many lower- and middle-income people could pay less under the proposed Trump tax plan, the details on how exactly those tax savings will be achieved are sketchy at best.
Even Gary Cohn, President Donald Trump’s top economic adviser said on Thursday that he couldn’t guarantee that taxes won’t go up for some middle-class families during an interview on “Good Morning America.”
“I can’t guarantee anything,” said Cohn, the director of the White House Economic Council. “You can always find a unique family somewhere.”
Trump’s tax plan would do a lot to benefit wealthy Americans, who some argue are the biggest winners thanks to reductions in corporate taxes and death taxes, though Cohn said it is “purely aimed at middle-class families.”
The tax plan would nearly double the standard deduction to $12,000 for an individual and $24,000 for a couple — this is the dollar amount that reduces the amount of income you’re taxed on. The full impact of this is impossible to know until the Trump administration releases the tax brackets, though it would likely spell savings for low- and middle-income families.
Trump’s plan also expands the child tax credit, which is $1,000 per dependent, though the plan released Wednesday offers few details on how this would be done.
Oh, and another thing: Cohn said when it comes to an individual’s tax impact, “it depends on which state you live in.”
If you live in California, New York, New Jersey, Illinois, Texas, Pennsylvania, Massachusetts, Maryland, Virginia or Ohio, sorry, but that’s bad news for your future tax bill if Trump’s tax overhaul is approved, according to the Tax Foundation.
Trump’s tax plan moves to eliminate a deduction for state and local taxes that overwhelmingly benefits high-tax states with a tendency of leaning blue. It’s a perk for residents of states with high taxes and high wealth that allows state and local income and property taxes to count as deductions on federal returns.
It saved New Yorkers a combined $63 billion in 2014, as well as $19 billion in Pennsylvania and $18 billion for Massachusetts taxpayers, the Los Angeles Times reported.
Trump’s tax reform plan aims to double the standard deduction and shrink the tax brackets to three — moves that are likely benefit lower- and middle-income Americans, but the price of losing the state and local tax deductions will mean negligible — if any — savings for residents of these states.
“The net impact of the proposal will be to shift a larger portion of the remaining tax burden to households in New York and other northeastern states, as well as California,” E.J. McMahon, president of the Empire Center, a fiscally conservative group in New York, wrote of the proposed tax reform.
New York Gov. Andrew Cuomo has gone as far as to call the GOP tax plan “illegal” and said it would be a “death blow” to New York.
“I would challenge it as double taxation. I pay taxes to my state and local government, you then want to tax me on the taxes that I paid to my state and local government,” the Democrat said.