5 ways Trump's tax plan would affect your household

4 ways Trump`s tax plan would affect your household

4 ways Trump`s tax plan would affect your household

SEATTLE -- The Trump administration has outlined its new tax proposal which leans heavily on tax cuts, but what would it mean for your household here in Western Washington?



Treasury Secretary Steven Mnuchin said the new tax proposal will offer "the biggest tax cut and the largest tax reform in the history of this country." Without greater detail from the White House, that's difficult to verify.

So far, President Trump says he wants to slash individual tax rates -- cutting the top rate from 39.6% to 35% -- and reduce the number of total rates from seven to three. He also wants to cut the top tax rate for all businesses to 15%, far below the current top rates.

"The majority of the benefits go to high-income people," says Joe Rosenberg, a senior research associate at the Tax Policy Center, a nonpartisan think tank.

A typical middle class family would save about $1,000 on their taxes, according to a Tax Policy Center analysis of the tax plan Trump pitched on the campaign trail. In contrast, a family in the top 1 percent would save about $215,000 and family in the top 0.1 percent would save over $1 million.

"What he's done directly for the middle class is very little," says economist Stephen Rose of the Urban Institute.

Here's what we know so far about the president's tax proposal:

Lower individual income tax rates:

The White House has yet to specify how much of one's income would apply to each of the three rates that Trump is proposing. So it's impossible to say what the change would mean in dollars and cents for anyone.

During the campaign, Trump had originally called for those rates to be 10% 20% and 25%. He later amended his plan, calling for somewhat higher rates to match what House Republicans have been calling for: 12%, 25% and 33%.

Double the standard deduction:

Tax break for child care costs:

Tax and child care policy experts have said both breaks, as proposed, would disproportionately benefit wealthier families. And in the case of millions of low- and middle-income families, the breaks could raise their tax burden when combined with Trump's other proposals to eliminate head of household status, repeal personal exemptions and raise the lowest income tax rate to 12% from 10% currently.

Repeal a string of taxes:

Much lower business rates:

Those run the gamut from mom-and-pop shops to law firms and hedge funds. In a pass-through business, the owners and shareholders report profits on their personal tax returns.

How Trump can help the middle class

Trump understands that "real America" wants more money in their wallets. He talks (and tweets) about "jobs, jobs, jobs." It helps explain why nearly 6 in 10 Americans say economic conditions are good, even though his overall approval rating is just 44%, according to the latest CNN/ORC poll.

"This bill is about creating economic growth and jobs," Mnuchin said. "What this is not going to be is a loophole to let rich people pay 15%."

Mnuchin also argues that Trump's tax plan won't add to the $19 trillion debt. He says the economy will grow so much after tax cuts that it will fully offset any lost tax revenues.

That's just "magical thinking," says Rose. He points out that tax cuts didn't pay for themselves or unleash a great economic renaissance under President George W. Bush or more recently in the state of Kansas.

If Trump really wants to help the middle class, Rose says he should push for more money for education and infrastructure. The jobs of the future require at least some college, and improving roads and bridges could help the economy and provide very tangible improvement across America.

Atwater (and plenty of Trump voters) also advise Trump to raise the minimum wage. That would be an immediate boost for the working poor.

And there's still time for Trump to scale back some of the tax breaks for the wealthy so his tax plan doesn't add as much to the debt.

Wire services contributed to this story.