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CPA: GOP tax reform plan would benefit poor, leave some of the middle class high and dry

CPA: GOP tax reform plan would benefit poor, leave some of the middle class high and dry
Posted at 5:49 PM, Nov 07, 2017
and last updated 2017-11-07 23:30:41-05

Right in front of Senators John McCain and Jeff Flake's offices, Indivisible Phoenix makes it known exactly what they think of the most recent tax plan put out by the GOP.

"This tax bill isn't reforming anything. It is reforming wealth at the top and leaving us at the bottom and middle out again," said Tanya Luken from Indivisible Phoenix.

That's not the whole story according to longtime Valley CPA, Robert Hockensmith.

"The bottom 20-percent of taxpayers are going to get bigger refunds," said Hockensmith. "The top one-percent are going to save some money, though they're saying now if you make $1 million dollars or more the tax bracket could go as high as 39.5 percent."

Hockensmith said based on the math, it's the middle class, especially homeowners, who would be on the losing end of this latest plan.

The bill eliminates certain tax breaks like the $4,050 per person personal exemption, and doubles the standard deduction.

A larger standard deduction means less people will itemize and be able to recoup some of what they paid out in mortgage interest.

"Ideally, the increase in standard deduction was supposed to balance out the loss of personal exemptions," said Hockensmith. "That's only true if you have one child. If you have more than one child it's not going to help you, it's going to hurt you."

But Hockensmith stressed there will be changes to the bill. He said to expect a lot of negotiating between the house and senate before it ever makes it to the president's desk. 

According to Hockensmith, here are some things to keep in mind:

For individuals:

  • New Tax brackets (12%, 25%, 35% & 39½)
  • Limited Property Taxes, Medical Expenses, and Mortgage Interest
  • Increased Child Tax Credit ($1,600)
  • Estate Tax phased out over six years, but immediately doubled exemption
  • Small tax credit for non-children dependents ($300)
  • Elimination of the Alternative Minimum Tax
  • Elimination of Personal Exemptions

For businesses:

  • Tax brackets reduced to 20% from 35%
  • Immediate tax deduction for assets purchased

You'll still be able to claim these deductions on your state return even if they are eliminated from federal.

  • All medical
  • All state, local, and property tax
  • All Mortgage Interest
  • Charitable Tax Credits