Talking Tax Reform - Part II
The Trump Tax Plan eliminates the Personal Exemption beginning in 2018 with the elimination scheduled to expire in 2025. What is a personal exemption? It represents an amount that a taxpayer is allowed to reduce their income by, lowering their tax liability. The 2016 amount for the personal exemption was $4,050 and the taxpayer gets one for themselves, their spouse and anyone they can claim as a dependent.
If we examine the history of the personal exemption, we would first travel back in time to the year 1913. The personal exemption that year was $3,000 (equivalent to more than $70,000 today) and was designed so that most people would pay no income tax. Other changes to the tax code, including the addition of the standard deduction are why the personal exemption's value has been substantially reduced since then.
The original purpose of the personal exemption was to exempt from taxation the amount that a person needed just to survive. Food, clothing, shelter and so on.
If the income of the taxpayer rises above a certain level ($259,400 for a single taxpayer in 2016), the exemption begins to phase out. The people behind the changes to the tax law are arguing that the increase in the standard deduction makes up for the loss of the personal exemption.
A reminder that this major overhaul of the tax code is nothing more than a gigantic giveaway to the wealthy being financed by adding over $1.5 trillion to the national debt over the next 10 years. This chart shows who are the real beneficiaries of this change to the tax code.
If we examine the history of the personal exemption, we would first travel back in time to the year 1913. The personal exemption that year was $3,000 (equivalent to more than $70,000 today) and was designed so that most people would pay no income tax. Other changes to the tax code, including the addition of the standard deduction are why the personal exemption's value has been substantially reduced since then.
The original purpose of the personal exemption was to exempt from taxation the amount that a person needed just to survive. Food, clothing, shelter and so on.
If the income of the taxpayer rises above a certain level ($259,400 for a single taxpayer in 2016), the exemption begins to phase out. The people behind the changes to the tax law are arguing that the increase in the standard deduction makes up for the loss of the personal exemption.
A reminder that this major overhaul of the tax code is nothing more than a gigantic giveaway to the wealthy being financed by adding over $1.5 trillion to the national debt over the next 10 years. This chart shows who are the real beneficiaries of this change to the tax code.
posted by me at 4:56 PM
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