Will We Really Save Money with President Trump’s Tax Proposal?

Will We Really Save Money with President Trump’s Tax Proposal?

President Trump is aggressively tackling many big projects. He wants to increase defense spending by 54 billion, he wants to aggressively cut taxes, and he wants to spend billions on infrastructure spending. He wants to do all of that without raising the deficit. Say what?

So, is he really going to significantly cut taxes? If you haven’t figured it out by now, President Trump is a master at the optics. He wants to control what people see and believe. He will say things over and over until people accept it. His tax proposal might be more like watch the right hand, keep your eye on the right hand, and don’t pay attention to what the left hand is doing.

If you reduce the tax brackets while taking away current tax deductions, do you really get a tax break?

The nonpartisan Joint Committee on Taxation, the official scorekeeper for Congress, wrote an article that details out what might be going away.

Some of the current tax breaks they mentioned:

HEALTH INSURANCE BENEFITS

Think of all of those people that get health insurance benefits from their employer. The value of those insurance policies is exempt from taxation. It would save tax payers $155 billion in 2016. They say that tax deduction is in danger of getting eliminated.

STATE AND LOCAL INCOME, SALES, and PERSONAL PROPERTY TAXES

Roughly 443 million families deduct state and local income, sales, and personal property taxes from their taxable income. It saved $70 billion for tax payers in 2016. They say that is in danger of getting eliminated.

MORTGAGE INTEREST DEDUCTIONS

Nearly 34 million families claimed the mortgage interest deduction in 2016 saving an estimated $65 billion.  This probably won’t go away.  However, they say it could be modified.

PROPERTY TAXES

Nearly 35 million families deducted their taxes on their home or other real estate from their federal taxable income in 2016. They saved a total of $33 billion.

This would hurt in States like Texas where property taxes are so high versus having a state income tax.  It is estimated that deduction is going away as well.

So the optics would be focused on the lowering of the tax rates.  On the surface that looks good. The question is how much will the elimination of some of the more popular tax deductions offset that saving?  The bigger question with almost 20 trillion dollars in debt and the fact we are borrowing almost ½ of every dollar we spend…..can we afford reductions in the tax code?

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