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

There will always be arguments and counter arguments by different parties to claim the bragging rights when it comes to the tax bills, i.e. old tax bill and new tax bill. However, let us explain the differences between the old tax bill and new tax bill.   

The new tax bill which has been passed by the Republicans on December 02, 2017 is claimed to be the biggest tax reforms in the history of United States of America by none other than the president of the United States of America Donald Trump.

Advantages of the new tax bill:

The main attraction of new bill is the corporate tax rate which has been reduced to 20% whereas in the old bill the corporate tax rate was as high as 35%. In the old bill the top rate of income tax for individuals was 39.6% which has been reduced to 38.5% in the new bill. The earlier standard deductions of $6500 for single, $13000 for joint and $9550 for head of the household have been revised and increased to $12000, $24000 and $18000 respectively in the new tax bill. The benefits of child tax credit and higher education facilities of the old tax bill have been revised and increased in the new tax bill.         

Disadvantages of new tax bill:

The lower individual tax rate of 10% of the old bill has been repealed completely to replace with 12% as passed in the House bill. The alternative minimum tax which was part of the old bill has been repealed in the new tax bill. The personal and independent exemption of $4150 of old tax bill has been repealed in the new tax bill. The medical expenses itemized deductions which were allowed in the old bill has been repealed completely in the new tax bill.

It would be unfair to term new tax bill better or worse than the old tax bill before assessing the practical implications of the new tax bill on the economy of the country and the household income and expenditures. However, at the basic level the new bill seems to have given the corporates preference over and above the common citizens of the country.