Congress, known for their impressive ability to do absolutely nothing, is about to let every American experience the joy of higher taxes. Whether you’re rich or poor, get ready to shell out more money because the Tax Cuts and Jobs Act of 2017 is set to expire at the end of 2025. But don’t worry, you don’t have to wait until then to feel the pinch.
Two key provisions of the Act have already started to phase out, and they were crucial to the economic growth we were seeing before the COVID-19 crisis. The bonus depreciation tax deduction and the Opportunity Zones tax credit are slowly diminishing year after year. And what does that mean for individuals and small businesses? Less capital to invest back into their own growth. Thanks, Congress.
Opinion💭by Julio Gonzalez
If Congress does absolutely nothing—which is what Congress is best at doing—then pretty much every American will soon be paying higher taxes. https://t.co/ep3lOd0KZz
Rich or poor, your tax bill is going up—and economic growth will decrease—when the…
— Epoch Times Opinion (@EpochOpinion) August 5, 2023
If Congress continues to twiddle their thumbs, we’re in for a few rough years. Small businesses, the real backbone of our economy, will be too busy preserving their capital to invest, grow, and create jobs. The slow demise of these provisions is already bad news, but it gets worse. The across-the-board tax cuts that came with the Act will also expire in 2025.
The top rate used to be 39.6%, but it dropped to 37%. The 33% bracket fell to 32%, 28% became 24%, 25% decreased to 22%, and 15% fell to 12%. So, guess who gets hit the hardest? You guessed it – the lower-income folks. They’ll be forking over an extra 3% of their hard-earned money to Uncle Sam. Meanwhile, the higher earners will experience a smaller hike but will still end up paying more overall.
But hold on, the Act did have some good news. It doubled the standard deduction from $13,000 to $24,000 for married filers. Unfortunately, this extraordinary benefit will also expire in 2025 unless Congress takes action. And let’s not forget about the changes made to the capital gains tax and the doubling of the lifetime gift and estate tax exemption.
To make matters worse, the economy is already in shambles. The current administration’s obsession with green energy is causing massive inflation and the global abandonment of the dollar. Just last week, the UAE and India decided to trade in rupees instead of the dollar. It’s no wonder many American families and businesses are barely hanging on.
So, what can we do about it? We can hope that Congress gets its act together and makes the provisions of the Tax Cuts and Jobs Act permanent. But with Trump attached to it, some Republicans might be hesitant to back it. So, it’s best to start planning for the worst and hoping for the best. Because if Congress lets these provisions expire, our economy is in for a world of hurt. It’s time to demand better from our elected representatives.