Wednesday, October 11, 2017
More details here (Hemel & Rozema, Which Working Families Will Lose Under the Trump Tax Plan?, Whatever Source Derived (Oct. 10, 2017)). The figure above illustrates results on the assumption that heads of household will choose to claim the new $12,000 standard deduction for single filers. Perhaps the most striking result is that many heads of household with incomes in the $30,000 to $40,000 range would see their net tax liability increase even if the child credit is increased by 50% (from $1000 under current law to $1500 under the Trump plan). This effect of the Trump plan on heads of household could be mitigated by raising the standard deduction for heads of household to $18,000 a year, as the Tax Policy Center has suggested Trump and Congress might do. Yet then-candidate Trump said he wanted to eliminate head-of-household filing status altogether, and neither he nor his top officials have signaled a change in heart so far.
Figure 2. Effect of Trump Tax Plan on Net Liability of Working Families ($18,000 Standard Deduction for Heads of Household)