MINNEAPOLIS (WCCO) – In a bill that’s 429 pages long, the Republican Party Thursday outlined its plan to fix the country’s tax code with the intention of saving middle class Americans money, while also making it easier for them to file their taxes.
Named the “Tax Cuts and Jobs Act,” the $1.5 trillion plan includes ideas for 401(k) contributions, state and local tax deductions and it reduces the number of tax brackets from seven down to four.
But many Minnesotans are still left wondering how it exactly affects them.
“I always do feel that middle class Americans might benefit in one or two places, but then they generally might lose out on a lot of others,” taxpayer Greg Wood said.
The glass is closer to “half full” at Prudent Accountants in Uptown.
“I wouldn’t say it would be more daunting. I would say if the promise is to simplify things, I’d go with that it probably will simplify things,” said M.P. Singh, CPA at Prudent Accountants.
Singh is sticking with the savings estimate that Republicans are touting for a families across country — that is, a family of four making about $60,000 a year, would see a tax cut of about $1,200 under the new proposal. He decided not to make further estimations because he said there are too many variables contributing to each tax bracket.
As for the idea of the tax forms being simplified and smaller, Singh is still withholding judgment.
“The promise of this bill is you should be able to do it on a post card, and if the standard deduction is the only deductions you’re going to go for, it might be feasible,” he said. “But again, we haven’t seen the forms.”
The potentially bad news is for states where people take advantage of deductions for state and local taxes. This proposal eliminates that opportunity, which has drawn the ire of lawmakers in states like New York and New Jersey.
“I think Minnesota is also one of the high state tax states, and it might have a worse effect for Minnesotans,” Singh said.
Wood firmly believes the tax plan does more harm than good for the average American, but Singh says there’s no need to worry about the tax bill — at least, for now.
“I’d say just ignore it. Just keep working what you’re doing. Go along with your day, work hard, and don’t start counting money yet,” he said.
Singh said most of the calls he’s been fielding regarding the bill have been from concerned business owners and people in real estate, but he’s still holding off making too many predictions on what the bill might mean for taxpayers until it’s all said and done.
Congressional leaders say they hope to have it passed by the end of the year.