Town Hall- Wednesday Night at 7:30PM on Facebook

Town Hall- Wednesday Night at 7:30PM on Facebook

Last week I asked people through social media and in person what their biggest concerns were for the upcoming mid-term election. By far the two most important issues were taxation and healthcare. Since both of these topics are very detailed we will discuss the new tax law at today’s Town Hall and discuss healthcare next week.

Our Live Town Halls will take place every Wednesday at 7:30pm Eastern on our Facebook Page: https://www.facebook.com/JuanParksforCongress/

Please feel free to leave any questions, comments, or concerns that you have here or email us at info@JuanParksforCongress.com and we will be sure to answer them!

Now the New Tax Law-

There have been many questions and concerns regarding this new tax law and, unfortunately, many misconceptions as well. But the important thing to remember is that this law is now just that- the law of the land. I’m here to help explain the law and how it affects you but also to help you understand how YOU can use this law to benefit yourselves. This is the law now so I am here to show you how taxation can work for you! And please remember that my job, as your next Congressman, is to connect you to the federal government and to make government work for you!

One of the biggest misconceptions about the new tax law is the tax brackets. 

The tax brackets are divided into 7 sections just like the old tax law. The tax brackets are lower for every group except people making under $9,525 a year for single people and $19,050 joint income for married people.  For those people that tax bracket remains the same as it was before- 10%.

Single Filers: Chart from Turbo Tax

Married Filers: Chart from Turbo Tax

These tax brackets will have the same effect on your taxable income that they had before this law was passed. So this portion of the new tax law really does change that much.

What part of the new tax law changes will actually effect you?

That will come in the form of the new Standard Deductions that people can take.

70% of Americans that file tax returns take the Standard Deduction. This is an average amount that the IRS complied to determine what most Americans would deduct from their income for things like charitable deductions, medical expenses, mortgage interest, student loan interest, lots of things but NOT including child tax credits- and the IRS  came up with the Standard Deduction.

So what is the Standard Deduction? It’s the dollar amount subtracted from your total income to lower your tax rate.

The new tax law nearly doubles the Standard Deduction. If you’re single- the standard deduction increases from $6,350 to $12,000. That means if you’re single and you make $30,000- your taxable income will only be $18,000 now.

 

Old Tax Plan Filing: Single Income:

$30,000

Standard Deduction: $6,350 Taxable Income:

$23,650

 

Tax Rate: 15% Taxes Owed: $3,081.25
New Tax Plan Filing:

Single

Income: $30,000 Standard Deduction: $12,000 Taxable Income: $18,000 Tax Rate: 12% Taxes Owed: $1,968.88

 

The new tax plan saves this person $1,112.37 per year. And that’s before Child Tax Credits.

Child Tax Credits have been doubled from $1,000 to $2,000 per child. In addition, the amount that is refundable increases from $1,100 per child to $1,400.

So what are non-refundable tax credits? A tax credit reduces the amount of taxes that you owe. So from the example of the single person we used earlier. Under the new tax law- this person owes $1,968.88 in taxes. However, if that person has 2 children, then he or she gets $4,000 in tax credits- meaning the government now can refund that person $2,031.12.

How will this tax law effect small businesses and entrepreneurs?

The new tax law has lots of changes for the business community.

For small businesses and entrepreneurs though- most of these businesses are called “pass-through” entities. These are your partnerships- the LLC’s; sole proprietorships- the single business owner like lawn care, or a solo entrepreneur that created a home business online; and S-corporations- which are a majority of your small businesses in Georgia. For these folks they can now deduct 20% for income generated through their businesses. This is a new deduction that wasn’t there before and will help relieve a large taxable burden for the small business owner.

Also, some businesses take out loans and “expense” or divide up the loan amount over several years so that they don’t have a huge tax burden on the year that they borrow money. The amount of money that can be expensed has almost doubled in the new tax law from $510,000 to $1,000,000 and it also eliminates the corporate alternative minimum tax. This will allow many more people access to start their own small business and, allow them to be able to take out a loan to start a business and not be saddled with a huge tax bill during their first year. Under the old tax plan many small businesses folded because they couldn’t afford to pay their taxes.

 

Why are corporate taxes permanent and income taxes only lasting for 10 years?

When Congress passes a law, they have to do 2 basic things: first discuss the procedure in which they will pass the law- this means everything from requiring members to vote publicly to determining the number of votes needed to pass the law based on the type of law it is. This procedural process also includes limits on what new laws can do. The Sunset Provision is part of this- and it states that anything in regular budget order (income tax is a regular revenue in the federal budget) must contain a sunset provision for 10 years because Congress believes that it’s unfair to make a law today that will be enforced on people in the next generation. Sunset provisions have been a part of American Law making since 1798.

 

Don’t forget to tune in for the Live Town Hall Wednesday evening at 7:30pm Eastern.

As always, we appreciate your support. Please feel free to donate in the link at the top of your screen, share this message with your network, and sign up to volunteer for Team Parks! This is Leadership for the Future!

 

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