Tax Reform Could Impact Gilbert Residents

Viewpoints - Guest Column

Gilbert Water Tower
Gilbert residents may not feel the benefit of the proposed tax reform proposed by President Trump.
My Local News Arizona - Advertisement

Gilbert residents may not receive the tax break promised by President Donald Trump during his campaign trail if the tax reform bill proposed Sept. 27 is passed.

Trump’s tax reform bill calls for collapsing the tax brackets from seven down to three, 12 percent, 25 percent and 35 percent. Corporate taxes would go down from 35 percent to 20 percent and small businesses would be 25 percent, despite the tendency for small business owners to file their earnings on their individual taxes.

“It doesn’t take into account the fact that most small businesses file taxes as individuals. With fewer brackets, it’s pretty likely that those businesses will pay more taxes. The tax cuts being proposed only affect businesses who file their taxes as a S or C Corporation,” said Jasmine Holmes the owner and founder of 910West, a small business in Gilbert.

The taxable income levels, the range of income that are placed into certain tax brackets, has not been determined. 

The tax plan would also get rid of the state and local tax, or SALT, deductions which includes real estate and personal property, income and sales tax. This optional deduction helps taxpayers avoid being double taxed on the same income by the state and then federally.

The average range for property taxes in Gilbert is $800 to $1,500 with 14,628 households in that average bracket. Those 14,628 households face the risk of being double taxed on their federal taxes if the SALT deduction is removed.

In Arizona’s 5th Congressional District alone, consisting of Gilbert and other East Valley Cities, 34.46 percent of taxpayers claimed SALT. The total SALT deduction per capita was $1,293. That is $1,293 being deducted off a taxpayer’s tax liability, the dollar amount owed, on their federal taxes.

“I don’t really see any benefit and in many cases probably a detriment,” Holmes said. “The proposed changes seem to focus on the most wealthy not the middle-class. Since most of Gilbert is upper middle class, from what I’ve read, I think they’ll actually pay more taxes not less. This will push them out of the 28% bracket into the 33%.”

The removal of SALT could impact those filers in Gilbert who choose to itemize their deductions rather than choose the standard deduction. Itemized deductions also include mortgage interest, medical expenses and charitable donations. Trump has said he plans to keep the mortgage and charitable donation deductions.

Each taxpayer is entitled to whichever deduction is greater. With the new tax reform plan, the standard deductions will be doubled. The deduction for a single filer goes from $6,350 to $12,000 and from $12,700 to $24,000 for married filers.

By increasing the standard deduction and removing SALT deductions, lawmakers hope more people will choose the standard deduction as opposed to itemizing their deductions.

According to Dennis Hoffman, an economics professor at Arizona State University and director of the University Economist, there isn’t much benefit for individuals under this reform.

“Nothing on the table today is a big rate reduction on the individual side. The corporate reduction is potentially a big deal,” Hoffman said.

GOP lawmakers passed a budget resolution on Oct. 5 which can help get the tax reform bill passed. They plan to use the budget reconciliation process to pass their tax reform. This means the Senate would only need a majority vote to get tax reform passed.

 

The full tax reform bill has not been drafted yet. The GOP set Nov. 13 as the goal date on which it should be completed.

Editor’s Notes

Publish your Community News: We want your local news, business promotions, opinions, press releases, etc. Learn more about My Local News - Arizona.
Local Event Calendar: Add an event to your local Community Calendar
Realtors® click here: to learn more about Preferred Listing Ads.
Paid Sponsored Content: Let one of our reporters write and article about your business or organization.
Editor's Pics: Check out our Arizona Editor's Pics
Please note that My Local News does not fact check or edit Article Contributor's content.
MLN Arizona Google Analytics 2018 YTD
135,504 Users
444,210 Page Views
5:07 Average Session Duration
112,403 Subscribers