Question

The changes made by the Tax Cut and Jobs Act, 2017 to the tax provisions have changed tax rate for 2018 and people are getting a first hand experience of what it means to them. Address the questions below: What are the major changes made to the tax provisions by the Act? Make this no less then 3 paragraphs and in depth, thank you

Answer 1

Answer (1) : The Tax Cut and Jobs Act of 2017 brought about certain significant changes to the over taxation process. Let us discuss some of them as below:

                               A number of deductions like ‘various deductions’ costs of compliance costs have been scraped for the nearly 30 million tax filers with the standard deduction replacing them, thus making the overall tax filing process comparatively simpler. The itemized deductions and the alternate minimum tax were altered thereby altering the individual income tax, expanding the standard deduction. Tax credit to child have been increased and the tax rates to marginal economy have also been strengthened. Some of the itemized deductions have been brought under certain restrictions, such the State deductions, taxes for the local government and that of the interest of mortgage. The Tax authorities have gauged that the new standard and revolutionized steps would reduce the time required to fill in the tax filing by about 20%.

Answer (2) : The new Tax system has been acclaimed as a people friendly tax system. However, it will not be easy for the Government to sustain such a people friendly tax system in the short run. I the shorter run, the income of the Government will reduce many folds as this tax system would keep the earlier going taxes in to the hands of the people. This will affect the Government’s exchequer, ad their total revenue will go down considerably. The overall GDP of the nation might experience some slowness or an under GDP rate growth. However, in the longer run, if the Government brigs out effective tax regulations and other financial measures are taken to stabilize the economy, then it is expected that with the rise in the amount of savings at the hands of the consumers, the GDP will shoot up again soon. This will directly give more power to the Government’s budget.