Question

the changes made by the tax cut and jobs act, 2017 to the tax provisions have changed tax rate for 2018 and people are getting a first hand experience of what it means to them. go over the act and address the question s below
1 what are the major changes made to the tax provisions by the act?
2 what impact is it likely to have on our GDP and government's budget?
3 how have the changes in taxes affected you personally?
4 does everyone benefit from the changes in tax provisions or does it favor one group over other?
5 what changes do you agree and disagree with?
6 if you had the power to revise the act, what changes would you make?

Answer 1

1) Major changes made to tax provision by this act is that the corporate tax rate has been made low permanently from 35% to 21% and individual ordinary income tax rate has been temporarily reduced.Aggregate personal tax cuts in 2018 was $122billion and corporate tax cut was $83 billion.There was no change in long term capital gains. Standard deductions increased.Estate and gifts taxes increased.

2)In the next 10 years , because of the act ,GDP would increase by an average of 0.29 percent per year.GDP growth rate would be on an average 2.13 per cent as compared to 1.84%. As a result of this act, there will be a deficit in the government budget of $1 to $2 trillion and the debt will be added to the Federal budget.

3)The tax cut and jobs act will increase economic output in both long and short run as a reduction in tax will give incentive for investment and boost economic growth ,but this gain will not all go to the American's income.Households will save more when their tax is reduced.This act will affect the economy through increased incentive to work,save and invest . This will boost the economy and personally I will gain as I will work and save too.

4)Much of the tax cuts flow to higher income households or to corporations and not to lower income households.So everyone do not benefit.

5) I agree that large tax changes can move the economy . However I do not agree to how responsive individuals and businesses are to policy changes.

6) To make the most of their deductions,taxpayers should consider joining deductions from many years into a single year in order to to be more than $12000 or $24000 standard deduction.That way tax payers can take advantage of their deductions.