Okay, let's look at $20,000 - sm Posted: Oct 12th, 2017 - 10:56 am In Reply to: You can't use the 2016 tax rate because they - are going to make it
We don't know how all the brackets will shake out, true. But we do know about the bottom bracket. Right now we have 7 tax brackets starting at 10%. Under the proposed 3 tier plan, the bottom tax bracket (which is poor people making enough to pay taxes) is increasing from 10% to 12%. Is the 2% increase more than the doubled standard deduction $12? (The answer is no.)
Let's say a family has $20,000 in taxable income under the current system. Their tax is $2076. Close to 10.4%.
Same family under the proposed doubled standard deduction and a 12% bottom rate. They now pay $960. They have $8,000 taxable income. 12% of $8000 is $960.
I've seen some older articles that say they'll take away dependent deductions but increase child tax credits. So we'll have to watch that. But it looks pretty good just looking at the numbers they've floated so far. This holds true even when we run them for the working poor.
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