YOUNGSTOWN, Ohio (WYTV) – If taxes confuse you, join the crowd! But President Trump said he wants to help by reducing the number of tax brackets.
His ambitious plan would reduce investment and estate taxes, helping the wealthy. But administration officials said several other tax breaks that help well-to-do taxpayers would be eliminated and the plan would largely help the middle class.
It would double the standard deduction, but take away the alternative minimum tax and the Obamacare tax.
The plan would reduce the number of individual tax brackets from seven to three, with the new tax rates at 10 percent, 25 percent, and 35 percent. We’re still waiting to hear the dollar levels for each of them.
“I think lower tax rates make sense but remember, we’re going from seven brackets to three brackets and what they didn’t tell us is where do the brackets change?” said Jim Rosa, HBK Principal.
He said changing the number of brackets doesn’t simplify anything.
“The question is, what will more people do if they have more money in their pockets? What will they do with it?”
Spending it would help the economy.
The tax plan also calls for a large increase in the standard deduction you can claim at tax time. There would also be a change on the IRS tax forms that you might not like.
“The biggest item that they’re talking about eliminating are state and local income taxes and so all of us, here we are in Ohio, you may pay taxes to the City of Youngstown, to Ohio. Those would not be deductible any longer,” Rosa said.
Trump also wants to cut business taxes, reducing the top tax rate to 15 percent on owner-operated companies. That would help Todd Olson of BOC Water Hydraulics in Salem.
“We look for more funds to invest. Taxation has a dramatic impact on how much money we have to plow back into new projects, hiring new people, equipment, and tax policy is always critical,” he said.
Olson feels the current tax structure has sent more money to Washington, meaning there’s less in Columbiana County to invest in the business, hiring more workers, or adding more equipment and machines.
“When you look at global economy right now, U.S. businesses — we are heavily taxed. We’re competing against Germany and others with much lower marginal tax rates. What that means is they have more funds to be competitive and compete back against us,” he said.
While lower taxes would help him invest back into his business, Olson’s number one priority remains on another horizon — fixing the trade deals so American companies can compete better.
The White House will present its final tax reform proposal plans by August.