As with all Republicans, Donald Trump campaigned on a pledge to cut taxes for all Americans, but, unsurprisingly, some groups will benefit more than others. According to NPR, those in the highest income brackets will, on average, see an effective tax decrease of more than 7 percent whereas those in the lowest income bracket will, on average, see a tax decrease of less than 0.1 percent.
Republican tax cuts, as a rule, tend to benefit the wealthy the most. No surprise there, but what might surprise some people is that their taxes might actually increase under Trump’s administration. Specifically, single parents will pay a higher tax rate under Trump’s plan than they do under current law or would have under Hillary Clinton’s plan.
For starters, Trump plans to eliminate the head of household filing status which would force single parents to file as individuals. Those who qualify to file as heads of households receive a lower tax rate and higher standard deduction than those who must file as singles.
Trump has pledged to significantly increase the standard deduction. Under current law, it is $6,350 for singles, but Trump’s plan would raise it to $15,000. That will probably help single adults without children, but, among single parents, it wouldn’t make up for Trump’s proposal to eliminate personal and dependent exemptions. As Forbes explains, under Trump’s plan, single parents would see a tax increase of about $2,450:
‘Under current law in 2017, a single parent with one child can take a $9,400 standard deduction and two $4,100 exemptions, thus reducing her taxable income by $17,600. Trump would replace that combination with a $15,150 standard deduction, making $2,450 more income subject to tax. And bigger families would get hit even harder—their taxable income under Trump’s plan would go up by $4,100 for each additional child, relative to current law.’
A lot of people, understandably, get frustrated with the complexities of our tax code. It’s a complicated system and even members of the Supreme Court have claimed to misunderstand the filing instructions. That being said, part of the reason it’s so complicated is because it has to account for so many variables. When you simplify the system you are inevitably going to have some people whose taxes will increase:
‘Finally—and most consequentially—Trump would collapse the current tax schedule from seven rates to three. That may seem less complicated but it would actually raise rates at some income levels. The result: Higher taxes for many heads of household. For example, in 2017 a single parent with one child who claims the standard deduction would face a 25 percent tax rate on adjusted gross income (AGI) between $53,050 and $68,550, compared with just a 15 percent rate under current law.’
As the above chart shows, Trump’s tax plan would, despite his rhetoric, hurt single middle-class parents, while giving huge tax cuts to the wealthiest among us.
Featured image via Getty Images.