Federal Tax Reform May Be Bad News for Your Deductions
Both Republican tax plans may have serious impacts on residents in high-income states with places like California, Massachusetts, and New York impacted the most.
‘It’s not just that they’re going after itemized deductions in both the Trump plan and the Republican plan,’ said Jim Puplava on Financial Sense Newshour. ‘In both plans, they’re also looking at reducing contributions to pension plans, even though Congress critters get the most lavish pension plans and medical plans in the country.’
Ostensibly, when lawmakers seek to eliminate itemized deductions, they propose lower tax rates to compensate. But we’ve been through this before, Puplava noted, for example during the Regan tax reform era.
At that time, many deductions were eliminated, and tax rates were supposed to go from 50 to 28 percent. Though deductions and tax shelters went away in the first year, it took 3 years to phase in the new tax rates. The following year, with 1 year at 28 percent rates, George H. Bush raised the rate to 31 percent. Bill Clinton further raised tax rates to 39.6 and phased out part of itemized deductions.
This post was published at FinancialSense on 05/18/2017.