“Why are the naysayers so determined to block tax reform efforts on Capitol Hill? There’s all too much negativity among folks like Chuck Schumer and Nancy Pelosi. But the reality is that there is widespread optimism that tax reform can become a reality in 2017. Most on the left side of the aisle likely will not support efforts to improve the tax code, despite the fact that it will benefit the middle class, however you look at it,” says Dan Weber, president of the Association of Mature American Citizens [AMAC].
“House Ways and Means Committee Chairman, Kevin Brady, for example, says it’s a good bet that Congress will present the president with a tax reform bill this year.”
Some would argue that tax reform will chiefly benefit corporations and high earners. Weber says that individuals with the highest earnings will continue to pay nearly 70% of income taxes. And, cutting the corporate tax rate, which is a key component of efforts to streamline the tax code, will allow companies to create more, higher paying jobs for American workers.
In addition, he says, “the current tax code gives multi-national American companies an incentive to keep their earnings offshore and that has deprived us of taxes on the profits they make in foreign countries. Offering them a reduced tax on repatriated funds and reduced tax rates going forward will give them an incentive to bring that money back home where they will pay something, not nothing in taxes. And, it would give them funds for more job creation in the U.S.”
According to attorney and financial columnist Frank Aquila, if the U.S. would get serious about repatriation and lower the corporate tax rate, it could be the most important economic stimulus this country has ever seen.
As for the ordinary taxpayer, reform means reduced taxes, Weber says. “Not only would there be fewer tax brackets for the middle class to deal with, but lower rates and the proposed doubling of the standard deduction from $12,000 to $24,000 for married couples, would slash the tax burden for most families.
In addition, he adds, it would simplify filing by eliminating the need to itemize deductions since you would only need to itemize if your deductions exceed the new standard deduction.”
Although the proposed new tax code would also eliminate the ability to declare some expenses, it would continue to allow deductions for expenses related to home ownership, retirement savings, charitable giving and higher education.
“And then,” adds Weber, “there is the issue of how to simplify filing your taxes. The vast majority of us cannot file our tax returns without the aid of so-called professional tax services. Back in the good old days, it was a rather easy task. But, today the tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes. By reducing the number of brackets and doubling the standard deduction, among other things, we may not be able to go back to the good old days. But, it certainly can make life easier and less stressful for the majority of us as the deadline for filing approaches.”