A new method to measure inflation implemented by the IRS on Thursday as part of the GOP tax-reform package passed last year will cut into the effects of tax cuts also included in the bill, according to a new analysis.
Congress’s Joint Committee on Taxation estimates that the new, slower method of measuring inflation will result in a slower annual rise in the standard deductions Americans can claim on their taxes than would have occurred naturally under the old system of measurement, The Wall Street Journal reported.
The Journal also notes that the right-leaning Tax Foundation found that a married couple’s standard deduction in 2019 will be about $150 lower than it would have been under the old inflation-adjustment model. Many taxpayers saw their greatest tax benefits this year under the law and will see their tax cuts shrink over time, according to the analysis.
In a statement, an analyst from the Tax Foundation called the changes to which income is legally taxable “broad,” but cautioned that it will be years before taxpayers notice a significant difference on their bills as a result of the change in method of measuring inflation.
According to the group’s analysis, nearly 9 percent of Americans will see their tax bills overtake what they would have paid under the old tax law by 2025, while just 4.8 percent of Americans will pay more in their 2018 taxes.
“It is a broad change to the definition of what is taxable and the change is very subtle,” Kyle Pomerleau, director of the Tax Foundation’s Center for Quantitative Analysis, told the Journal. “It will take years before it really kicks in and tax bills are noticeably different. However, even then it will be hard to tell because everyone’s economic situation will have changed.”
President TrumpDonald John TrumpBroward County official Brenda Snipes submits resignation after criticism Retired lieutenant general tears into Trump over attacks against Navy SEAL: ‘Disgusting’ Senate barrels toward showdown over Trump’s court picks MORE said last month that he would push for a second round of tax cuts following the midterm elections, which last week saw Democrats retake the House while the balance of power in the Senate remained relatively unchanged.
“We’re doing it now for middle-income people. This is not for business, this is for middle,” Trump told reporters in October, adding that “we’ll do the vote after the election.”
Go to Source
Powered by WPeMatico