What are your thoughts in light of the recent tax overhaul a

What are your thoughts in light of the recent tax overhaul at the end of 2017?

Solution

The recent tax overhaul at end of 2017 will have following implications:

1. Implications for corporates: The reduction in corporate tax will benefit them as it will lead to tax savings. This extra savings can be utilised for capital investment, investment in new projects. By reducing the tax rate from 35% to 21% the corporate taxes will reduce significantly. Moreover, income from foreign operations by US companies will not attract tax.

2. Implications for individual tax payers: The tax cuts will benefit individual tax payers in the small run. This will increase their savings. However if the expenditure increases then inflation will eat way their savings in the long run. Another benefit for tax payers is higher employment opportunities and salaries due to reduction in corporate tax cuts. Further tax deduction on child care will benefit the individual tax payers but deduction on medical expenses has decreased. Alimony and fires and natural disaster losses can be used for exemption. Overall the individuals are winners because of the tax cut.

3. Implication for the government,: In the short run tax revenue will be less but in the long run during more no of projects and higher income levels of individuals and corporate will increase the tax revenues.

Best of Luck. God Bless