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GOP Tax Reform: “Give” and Take

December 11, 2017

Some say the new tax reform bills only amount to a tax cut for the richest Americans.

But what seldom gets mentioned about these bills is, that while there are tax cuts for Americans of all income levels, an additional tax bracket is in play for the rich. 

Part of the reform package is a fifth tax bracket that captures 45.6 percent of income earned above $1.2 million. For years taxes were capped at 39.6 percent, but the government wants another 6 percent apparently. 

Not only does that not seem fair, it also goes against the Republican mantra of lower taxes. 

Could the GOP be raising taxes on the rich? It seems the answer is yes.

With the media consistently calling tax reform a win for the rich, it’s no wonder we’ve come to a day when Republicans are levying additional taxes on high-earning Americans.

Since we have a marginal tax rate, the high earners will only be taxed the highest rates on their highest levels of income. But some, including the GOP, argue all income should be taxed at the highest possible rate!

Sure, politicians want to increase the amount of income that can be taxed at the low 12 percent rate to $90,000 annually. However, by adding an additional bracket on the top end, they make up any overall “savings” extended to Americans.

Time will tell on the effectiveness of these reforms. 

Either way, we need to be careful because the stock market has already baked in tax cuts into its performance. Big changes in taxes, even if just floated as ideas, could affect stock returns.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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