Pros & Cons of Jeb Bush’s Tax Plan
The other day, we took a look at presidential hopeful Donald Trump’s possible tax plan. Today, we’ll examine another candidate’s tax goals, Jeb Bush.
Much like his opponent, the Florida Governor also wants to make some significant changes to the nation’s tax structure. For example, he plans to lower the highest tax rate, offer relief to low income earners, reform corporate taxes, and at the same time, promote a “4 percent growth” in the nation’s economy.
Bush outlined his plan in a Wall Street Journal op-ed. Below are a few of the ideas the Republican candidate plans to implement if elected president:
- Lower the number of tax brackets – Bush aims to reduce the number of individual income tax brackets from 7 current brackets, which range from 10 to 39.6 percent, down to three brackets, taxed at 10, 25, and 28 percent.
- Drop the corporate tax rate – Bush also wants to cut the top corporate tax rate from 35 percent to 20 percent, as well as modify the rate to a territorial tax system.
- Changes in deductions – Bush’s tax plan seeks to cap the tax deduction total at two percent of a tax payer’s adjusted gross income. He also wants to roughly double the amount of the standard deduction.
- Raise earned income credit – In addition to the aforementioned changes, Bush hopes to double the earned income tax credit for workers who do not have children.
- Eliminate Fund Manager loopholes – Bush plans to eliminate the carried-interest loophole provision that lets certain fund managers claim their income as capital gains, which gives them a lower rate.
The pros of Bush’s tax plan
The question on many taxpayer minds is whether or not they will benefit from Bush’s proposed tax plan. As it stands, the plan appears to appeal to low and middle income earners, with the potential to increase the number of families who do not have to pay income tax to a whopping 15 million.
However, at the same time, the tax plan seeks to do away with certain deductions and cap the amount that taxpayers can deduct. This can have a negative backlash (mostly on higher income earners), given that many Americans count on those deductions as a way to lower the amount they are expected to pay to the IRS.
Business owners stand to enjoy some of the larger number of benefits from the tax plan, which would cut the corporate rate from 35 to 20 percent and tax businesses solely on earnings they make in the United States.
Is the plan sustainable?
Like any tax plan, Bush’s has the potential to offer both pros and cons for the American public and for the economy as a whole. However, many are skeptical as to the plan’s ability to generate a 4 percent growth in the economy merely through changes in tax policy alone.
In the end, if Bush is elected and the tax policy is approved, Americans may want to look into speaking with an experienced tax attorney to discuss the plan’s possible implications and ensure their rights as taxpayers are not infringed upon.
Often, when one income bracket stands to gain from changes in tax policy, another stands to lose. A tax lawyer can analyze the drawbacks and help taxpayers make changes with their investments, how they actually file taxes, and offer other ideas to help protect their earnings from excessive taxation.