President Trump has proposed a tax plan that promises to save taxpayers money over the next 20 years. By reducing the marginal tax rates at all income levels across America, the proposal aims to save $6.2 trillion in income tax over the first decade and $8.9 trillion in the second decade. However, with tax rates decreasing, the federal debt is projected to increase by at least $7.0 trillion over the first decade and by at least $20.7 trillion by 2036, according to the Tax Policy Center.
It’s important to note that no laws have been passed yet so these proposed changes have not taken effect—and there is nothing to say that they will go into effect. President Trump could change his mind at any given time and propose new tax laws. There is also nothing to say that he will get everything he wants in a tax plan once it is put in front of Congress.
It is important, though, to understand how these proposed plans will affect after-tax income if they do become law. A financial advisor can help plan, set expectations and make changes if needed. (For related reading, see: Will the Policy Uncertainty Index Doom the Trump Rally?)
Who Can Benefit the Most
There are currently seven different income tax brackets; there would be three under the proposed plan. The new plan would cut taxes at all income levels, although in terms of both dollars and percentages, high net worth households would benefit the most from the…