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INDIANAPOLIS — President Donald Trump promised a “middle-class miracle” with his new tax reform framework released Wednesday.
Trump’s tax proposal includes tax breaks and reductions intended to help middle-class workers, as well as provide breaks for businesses.
“Democrats and Republicans in Congress should come together, finally, to deliver this giant win for the American people and begin a middle-class miracle,” Trump said during a speech in Indianapolis on Wednesday.
Billy Hesterman, vice president of the Utah Taxpayers Association, is cautiously optimistic about the plan and agreed that much of the framework is geared toward helping middle-class families.
“That clearly seems to be the goal on the outside of what this framework is that they released (Wednesday),” Hesterman said.
Trump’s tax plan would see the seven current tax brackets reduced to three rates — 12, 25 or 35 percent. Congress would have the option to apply another, higher rate for the highest-income taxpayers, the president said Wednesday.
According to Trump’s framework, the first $12,000 of yearly income earned — or the standard deduction — would be tax-free for individuals. For married couples filing taxes together, that tax-free income would be up to $24,000. Currently, the standard deduction is $6,350 for single individuals and $12,700 for married couples.
The estate tax, which Trump has called the “death tax,” would also be eliminated. The tax is assessed on the transfer of the estate of someone who has died.
"To protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax, or as it is often referred to, the death tax,” Trump said.
On the state level, Utah has no estate tax, Hesterman said, so that change would only affect Utahns who are dealing with estate transfers at the federal level.
There are always “winners and losers” in tax reform, though, Hesterman said. Some taxpayers will see their burden increase, while others will see their share go down.
Tax cuts often are good for the economy, but they limit the federal government’s ability to keep up with the national debt, Hesterman added.
“We do have a spending problem in Washington,” he said. “We have a large amount of debt, and a tax cut does slow down our ability to keep up with the debt that our country has. We have to be aware of that and cognizant of that as we move forward.”
With Trump’s new plan, it’s too soon to tell who will benefit most and who will miss out, Hesterman said.
“This is the starting point,” he said. “We’re going to see what the real bill or legislation is at the end of the day probably in a month or two or maybe longer. Then we’ll be able to see who really the winners and losers are.”
Trump’s plan calls for the elimination of certain tax deductions, but taxpayers will still be able to deduct mortgage interest payments and charitable donations on their tax bills. Hesterman said Utahns should be happy to see those deductions sticking around.
The corporate tax rate would be lowered to 20 percent, and the rate for small businesses would be lowered to 25 percent. Those changes would allow more job creation and more capital investment, he said. Hesterman said that’s another point in the framework that Utahns should like.
“We have to make sure we’re being competitive with other parts of the world, and lowering that rate is going to be able to do that,” Hesterman said. “That is a significant thing to look for and hopefully they’ll be able to carry that through to the end as this bill moves forward.”
