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NATION/WORLD
East Oregonian
Friday, April 28, 2017
Trump tax plan: Relief for his voters, lots of unknowns
By STEPHEN OHLEMACHER
Associated Press
WASHINGTON — President
Donald Trump’s plan to over-
haul the nation’s tax code could
provide significant tax cuts for the
working-class voters who elected
him, but the unknowns could end
up hurting many of these core
supporters of the president.
A look at how Trump’s tax plan
could affect families at different
income levels:
THE WORKING CLASS
These are the people who have
been left behind by an increasingly
globalized economy.
Trump’s proposal, a one-page
outline short on detail, says he would
double the standard tax deduction,
which could provide significant
relief to working-class families.
But Trump’s top economic adviser
used some bad math to describe the
proposal, raising questions.
Gary Cohn said the standard
deduction for a married couple
would be doubled to $24,000. But
that’s not double. The standard
deduction for a married couple
is $12,700, so double would be
$25,400.
Cohn said the deduction would
create “a zero tax-rate for the first
$24,000.”
That sounds great, but very few
families making $24,000 a year pay
federal income tax, said Roberton
Williams, a fellow at the nonpar-
tisan Tax Policy Center. In fact, 44
percent of all U.S. households pay
no federal income tax, though most
pay other taxes.
Trump’s one-page sketch is silent
on whether the tax code would still
include the personal tax exemption,
which allows most families to
exempt $4,050 in income for each
spouse and dependent child. In big
families, this tax exemption can add
up.
During the campaign, Trump
released a tax proposal that would
eliminate the personal exemption.
Also during the campaign,
Trump proposed getting rid of the
“head of household” filing status,
which is mainly used by single
parents. This filing status provides a
lower tax rate and a higher standard
deduction than filing as a single
person.
Trump’s new plan is silent on
this issue as well.
THE MIDDLE CLASS
The median household income
in the U.S. is about $55,000, though
people living in high-cost areas can
make much more than that and still
feel like they are in the middle class.
Doubling the standard deduction
— or at least raising it to $24,000
— could provide significant tax
relief to middle-income families.
But whether they pay more or less
depends largely on details that have
yet to be released.
One of those pesky details is
how Trump will structure the tax
rates on individual income.
Trump has proposed reducing
the number of tax rates from seven
to three — 10 percent, 25 percent
and 35 percent. But the administra-
tion has yet to determine the income
levels for people who would be put
in each bracket.
HIGH-INCOME FAMILIES
Trump’s plan has the potential
to provide big tax cuts to high-in-
come families — unless you live
in a state with high state and local
taxes.
Trump calls for eliminating the
Alternative Minimum Tax, which
was enacted in 1969 to prevent
high-income people from paying
no income tax. It has evolved over
the years and now impacts about 5
million households, most of them
making between $200,000 and $1
million a year.
In 2005, Trump himself paid
$36.5 million in taxes, mostly
because of the AMT. Without it, he
would have paid just $5.5 million,
according to a leaked copy of that
year’s return.
On the flip side, Trump wants
to eliminate the deduction for state
and local taxes, a big tax break that
benefits millions, especially people
living in Democratic-controlled
states with high local taxes such
as New York, New Jersey and
California.
Last year, more than 43 million
families claimed the deduction,
saving them nearly $70 billion.
THE SUPERRICH
These are the 1 percenters, people
like Trump who make millions
a year and are worth even more.
Trump is proposing big tax cuts for
the superrich, including repealing
the estate tax.
The federal estate tax is widely
misunderstood. The fact is it affects
very few estates.
If your parents’ estate is worth
less than $10.9 million, you don’t
have to worry about this tax. This
year, about 5,200 estates will pay
the tax, according to the Tax Policy
Center.
Trump also wants to reduce
the top income tax rate from 39.6
percent to 35 percent. But perhaps
the biggest windfall for rich people
could come from Trump’s plan
to lower the top tax rate for small
business owners from 39.6 percent
to 15 percent.
Rich people, including Trump,
tend to report a lot of business
income, Williams said.
But the true effect of this tax
cut will depend on how the Trump
administration defines a small busi-
ness owner. If the tax cut applies
to all business income reported
on individual tax returns, it would
be a huge windfall for many rich
families.
Treasury
Secretary
Steve
Mnuchin said Trump will propose
safeguards that would prevent rich
people from taking advantage of the
tax cut, but he provided no details
on how that would work.
BRIEFLY
“There is no doubt in my
Tillerson says
mind,” Harris said.
China asked North
Korea to stop
Senate confirms
nuclear tests
Alex Acosta as
WASHINGTON (AP)
Trump’s secretary
— U.S. Secretary of State
of labor
Rex Tillerson said Thursday
that China has threatened to
impose sanctions on North
Korea if it conducts further
nuclear tests.
“We know that China
is in communications with
the regime in Pyongyang,”
Tillerson said on Fox News
Channel. “They confirmed
to us that they had requested
the regime conduct no
further nuclear test.”
Tillerson said China
also told the U.S. that it had
informed North Korea “that
if they did conduct further
nuclear tests, China would
be taking sanctions actions
on their own.”
Earlier Thursday, the
senior U.S. Navy officer
overseeing military
operations in the Pacific said
the crisis with North Korea
is at the worst point he’s
ever seen, but he declined to
compare the situation to the
Cuban missile crisis decades
ago.
“It’s real,” Adm. Harry
Harris Jr., commander of
U.S. Pacific Command, said
during testimony before
the Senate Armed Services
Committee.
Harris said he has no
doubt that North Korean
leader Kim Jong Un intends
to fulfill his pursuit of a
nuclear-tipped missile
capable of striking the
United States. The admiral
acknowledged there’s
uncertainty within U.S.
intelligence agencies
over how far along North
Korea’s nuclear and missile
programs are. Harris said it’s
not a matter of if but when.
WASHINGTON (AP)
— The Senate on Thursday
confirmed Alex Acosta as
Labor secretary, filling out
President Donald Trump’s
Cabinet as he approaches his
100th day in office.
The 60-38 vote confirms
Acosta to the post. Once
sworn as the nation’s 27th
Labor secretary, the son
of Cuban immigrants will
lead a sprawling agency
that enforces more than 180
federal laws covering about
10 million employers and
125 million workers.
Sen. Tim Scott, R-S.C.,
spoke for many Republicans
with a statement issued just
after the vote saying he
hopes Acosta’s focus will be
“promoting labor policies
that are free of unnecessarily
burdensome federal
regulations.” Scott said he
wants Acosta to permanently
revoke rules governing
financial advisers and adding
Americans eligible for
overtime pay.
Democrats said any
Labor secretary should
advocate for the American
workers to whom Trump
promised so much during
his upstart presidential
campaign. They said
Acosta has given no such
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Acosta has been a
federal prosecutor, a civil
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Department and a member
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arrive at the top post with
relatively little clear record
on some of the top issues
facing the administration
over key pocketbook issues,
such as whether to expand
the pool of American
workers eligible for overtime
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Sat 8am to 6pm and Sun 8am to 4pm
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