The catch is that restructuring the tax code would undo tax breaks and in some cases, force people to pay more taxes in the end.

Can you really cut taxes for everybody, with nobody feeling any pain?

The answer is yes — but that’s not what President Donald Trump proposed when he announced his tax-cut framework on Sept. 27. Trump’s plan, for now, is more ambitious than a simple across-the-board tax cut.
He wants to simplify the whole structure of the U.S. tax code and create better incentives for companies to do business in the United States. In general, tax experts agree these are worthy goals.

The catch is that restructuring the tax code would undo tax breaks many filers have relied on for years, and in some cases, force them to pay more taxes in the end. Congress still has to work out the details that will determine winners and losers, but Trump’s starter framework suggests that a meaningful number of Americans could end up paying more in taxes, on net, rather than less.

The main change to watch is the proposed elimination of the deduction for state and local taxes, which tax experts refer to as SALT. About one-third of the 145 million households filing a tax return — or roughly 48 million filers — claim this deduction. It’s more popular among the wealthy, because they’re more likely to itemize their deductions instead of opting for the standard one. Among households with income of $100,000 or more, the average deduction for state and local taxes is around $12,300.

“Upper income people who deduct state and local taxes are most likely to be the biggest losers,” says Joe Rosenberg of the Tax Policy Center.

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

Read more:

• And for all the bounty hunters: Iran offers $80m for the head of Donald Trump
• US service member and 2 US Defense Dept contractors killed in Kenya attack
• Iranian Quds leader Qasem Soleimani has been killed – how are markets reacting
• A calm end of an otherwise loud 2019
• Old but Gold – Top 5 posts of Varchev Finance