While I still haven’t had a chance to sit down and read Trump’s proposed tax plan in its entirety, I’ve heard bits and pieces about it in the news and on social media; one area that has sparked my interest is the postcard tax return. Over the years there have been conversations in regards to the complexity of the US income tax structure and the need for simplicity. Although I’m in the professional tax preparation business and the complex structure provides job security, I feel there is some need for simplicity that US taxpayers can benefit from – hence my interest in the postcard tax return.
First, here’s an image of what the proposed postcard return will look like.
Now that you know what it looks like, let me point out some glaring issues that I see immediately:
At a quick glance, this postcard tax return doesn’t hold up to my expectations. The removal of personal exemptions and “roughly doubling” the standard deduction isn’t as beneficial as it appears on the surface. One other thing to note that comes straight from the Ways and Means Committee website, one of the highlights of the plan is that it:
Lowers the corporate tax rate to 20% – down from 35%, which today is the highest in the industrialized world – the largest reduction in the US corporate tax rate in our history.
Corporations are seeing some of the largest tax breaks in US history under this plan, while a married household of five sees a decrease in eligible deductions by $8,950 (and that’s only from the removal of personal exemptions and increasing the standard deduction). I will say that this quick overview does not consider the rest of the tax plan, but I can almost guarantee you that the plan isn’t breaking record numbers when it comes to savings for the average US taxpayer. Corporations are winning even more under this plan, while middle and low-income taxpayers are dangled a carrot to distract them.
SOURCE: The Tax Cuts and Jobs Act – Ways and Means https://waysandmeans.house.gov/taxreform/
I am a personal and small business finance enthusiast with a deep interest in making people's lives a little easier with financial tips and advice.