Question

The old tax bill vs the new tax bill.

Due:

explain the difference between the two types of bills

advantage and disadvantage

which one is better?

Answer 1

Differences between both type of bill;

As we know that with the passage of time no law & regulation remains fit in all conditions hence change becomes necessary. So government think about bringing new tax bill.

There are some main differences between both bill;

1. New bill mainly focuss on the reducing corporate taxes from 35% to 20% in compare to previous bill in which taxes were reduced from 46% to low rate. New bill is more wide because it made various simple and detailed benefits for the corporations such as full deduction of cost of investment in the same year. So old bill was just opposite to these provisions because old bill demotivated such deductions and also raised capital gain tax.

2. New bill provides more benefits to the top classes wheras old bill was focussed on removing the gap between top and lower class because under old bill gini index was reduced massively. So we can say that old bill was more elagitarian whereas new bill is more regressive.

3. Another main difference between both bill is the cost of bill. As we know that old bill was revenue neutral whereas new bill result into massive costs because as per this new bill government will loose major portion of revenues.

Advantages of new tax bill;

Followings are the main advantages of new tax bill;

1. Lower corporate tax rates.

2. Lower estate tax rates.

3. Stimulate to more economic activities.

4. Low corporate tax will result into higher jobs creation.

5. Standard deduction has been increased for individuals, married couples as well.

6. Higher tax break in new law that has been increased.

7. Exemptions to U.S. corporations from U.S. taxes on most future foreign profits will result into alignment of US taxation with other nations.

8. Companies will be prevented from shifting their profits to lower tax nations. Thus overall it will result into more revenues for public welfare in the country.

9. Firms & companies will be promoted to expense more investing nature expenditures because now they can easily write off these expenses.

10. More tax credit for clean energy sector will stimulate environment protection etc.

Disadvantages of new tax bill;

Followings are the main disadvantages of new tax bill;

1. Low amount of deduction for interest on a mortgage.

2. Low deduction for interest will result into fall of the prices of house. As a result it will lead to recession in real state and various negative impact as well.

3. No more deuctions for casualty and theft losses except disaster areas.

4. Deductions for medical expenses has been reduced.

5. Various types of miscellaneous deductions have been eliminated.

6. Personal exemption has been decreased.

7. Repeals of Minimum Alternative Tax may create some problem for the corporations because not corporations have to pay some taxes etc.