The Tax Reform Plan: A Closer Look

The tax reform effort comes on the heels of the latest health care reform effort falling short.

But what changes to the tax code are in store for taxpayers and business owners?

A plan full of dollars and cents that its backers hope makes enough sense to vote for.

"I think it's true that the tax laws are complicated," says Raju Chenna, Assoc. Professor of Accounting at Kentucky Wesleyan College.

In a statement, Kentucky Sen. Mitch McConnell says the plan is a refreshing change from our current outdated tax code, which for too long hasn't worked for many Americans.

Among the changes to tax laws in this plan: doubling the standard deduction to $24,000 for joint filers, and $12,000 for a single filer. It increases the child tax credit, making the first $1,000 of the credit refundable. And the current seven tax brackets, down to three, with those set at 12, 25, and 35 percent.

The plan also gets rid of the death and alternative minimum taxes, and reduces the corporate tax rate from 22.5% to 20% Chenna says who benefits the most is uncertain, but wonders how the government makes up for lost tax revenue.

"One big issue here that the problem most Americans would have is every time you see a tax cut, how are you paying for it? So, the estimates are anywhere $1.5 trillion over 10 to $7 trillion that's what its going to cost over 10 years," Chenna says.

In a statement, the Democratic National Committee called the plan "nothing more than a thinly-veiled giveaway to big corporations and the one percent". Political Science Professor Daniel Kuthy of Brescia University says while some lawmakers may have problems with its impact on the federal deficit, Republicans may get some Democrats to go along.

"For example, Senator Joe Donnelly of Indiana, as you've seen, has expressed some support for some aspects of tax reform," he says. "This is one area where they have some better ability to get Democratic support on this bill."

(This story was originally published on September 27, 2017).


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