Know the Ins and Outs of Taxes to Protect Your Financial Future

Many Americans and American businesses would love to save more money and pay less taxes. The issue is heightened even further, as the Trump Administration and Congress considers making significant changes to the US tax code. Plus, the end of the year is nearly upon us, so many taxpayers are making last minute plans to put themselves in the most financially-prudent position ahead of next year’s tax filing deadline.

Fixing the Tax Code

The United States tax code is unquestionably complicated and for years, politicians, businesses and financial professionals have been floating various proposals to overhaul the way both individuals and corporations tax. That’s where the Urban-Brookings Tax Policy Center (TPC) comes in. A joint venture of the Urban Institute and The Brookings Institution, the Washington, D.C.-based center was established in 2002 with a mission to provide high-quality, objective data and analysis on tax policy issues to policymakers, the media and the public. And the center does not skew to the left or the right.

“TPC provides non-partisan analyses of tax policy issues,” said Mike Mazur, the director, who spoke to RewardExpert. The TPC staff is made up of recognized tax, budget and social policy experts who have served at the highest levels of government.

Watching Out for Your Pocketbook

On its website, the center has extensive details on how it thinks tax reform should be drafted and implemented. Mazur stated, “Tax reform proposals should raise adequate revenue to fund government goods and services demanded by the American public, increase the efficiency of the tax system, improve the equity of the tax system and help simplify the tax system.”

Mazur noted that said it’s important for both individuals and small business owners to keep a close eye on developments out of Washington. “Individual taxpayers should be paying attention to the tax policy legislative process unfolding in the coming weeks and months. They should contact their legislators to ensure that their policy preferences are taken into account.” In addition, Mazur explained that small business owners should be doing the same thing – contacting their legislators to ensure the best proposals for their businesses are being discussed.

Where Tax Reform Goes from Here

As of now, the prospect of tax reform is still very much up in the air. Still, the Tax Policy Center has produced an analysis of the initial plan, finding that it would “reduce federal revenue by $2.4 trillion over ten years and $3.2 trillion over the second decade.” It also found that “those with the very highest incomes would get the biggest tax cuts,” according to analysis published on the TPC website.

The website also has information on critical and controversial issues facing taxpayers and how reform would impact these much-talked about provisions in the tax code. These include:

• the capital gains tax, in which the center is calling for the possibility of raising the 15% long-term gain rate to 20%;
• the estate tax, in which the center is warning that by eliminating the estate tax it could inadvertently put charitable contributions at risk;
• and the child tax credit, in which the center has concluded that the initial tax reform framework more or less keeps the status quo.

Also featured are in-depth statistical models showing the effective tax rate for all sorts of income levels for both individuals and corporations.

Keeping Watch on Washington

Whether tax reform happens or not, it is important to keep up to date with the latest happenings. The Tax Policy Center provides the latest research and insight to allow American individuals and businesses the opportunity to do just that. Check it out at www.taxpolicycenter.org.