Americans across the nation benefited from the recent tax overhaul that retrofitted the US’ archaic tax code and deregulated the market for companies of all shapes and sizes. A vast number of Americans still don’t truly understand recent tax reform efforts, however, and don’t know where to turn to for good advice. Wealthy Americans in particular seem torn on whether the latest reform will be beneficial to them, and should understand these key facts when considering the overall effects of the Tax Cuts and Jobs Act.
Americans now support the Tax Cuts and Jobs Act
When President Trump signed the Tax Cuts and Jobs Act into law, the bill was dismally unpopular, suffering a heavy beating in the press and being touted by democrats as a surefire way to win elections in the 2018 midterms. Since then, however, public opinion has swayed on the issue of tax reform, and a majority of Americans now justifiably view the Tax Cuts and Jobs Act positively.
While the new tax law may be widely enjoyed by the broader public, however, it will differ in how it impacts disparate groups of Americans. Wealthy Americans, for instance, are one of the biggest winners from the recent tax cuts, largely because they’ve been shouldering most of the tax burden recently and gain the most from almost any tax cut thanks to the fact that they pay the largest share of taxable income within the populace.
The tax reform instituted sweeping changes to America’s aging tax code, and reshaped how many wealthy Americans are planning for retirement. A reduction in the individual income tax will mean most wealthy taxpayers have significantly more cash in their pocket come tax season, which can be put forward towards savings for those workers trying to get a leg up on an early retirement. A majority of affluent Americans who were surveyed recently even went so far as to claim they’d be adjusting their financial plans thanks to the tax reform efforts, meaning those who think the cuts are a small deal should reevaluate their economic impact.
Wealthy Americans who are confused thanks to recent tax reform efforts should consult with their CPAs immediately, particularly when it comes to the new deductions; taking advantage of the new 20% deduction, for instance, is one way that business owners will be seeing huge benefits from the recent reform. Investors are set to benefit from the reform as well, and Americans from all economic classes have already enjoyed surging stock prices and a roaring economy that’s thanks, in part, to recent tax reform.
The major takeaway from the recent reform effort should be that there’s never been a better time for wealthy Americans to invest in the US economy; with stocks roaring, consumer confidence at an all time high, and repatriation taxes likely to incentivize US companies to bring their profits back stateside, the economy is set to continue growing and reaping in returns for wealthy Americans who put their faith in Uncle Sam.
The consensus for the wealthy is positive
It almost goes without saying that there’s a general consensus that the tax law will be hugely popular amongst wealthy Americans, and for good reason; think tanks from across the political spectrum have put out analyses of the Tax Cuts and Jobs Act showing how beneficial it will be to America’s top earners and innovators. Even the left-leaning Tax Policy Center, for instance, showed that the distributional effects of recent reform would overwhelmingly affect the high-income earners who shoulder the majority of the tax burden the government imposes on citizens.
While changes to the standard charitable deduction will likely force wealthy Americans to jump through small hoops when filing their returns, like bunching up their charitable donations, for instance, the law will overwhelmingly make life easier for the wealthiest of Americans. Lines of credit will be easier to pay off than ever before, and investors everywhere will have an easier access to the market thanks to fewer regulations. Wealthy Americans should still meet with their CPAs to discuss the intimacies of their personal situations and asset protection, however; what’s good for the majority isn’t always good for the individual, after all, and only by consulting with your financial advisor can you be certain you’ll benefit from recent reform.
Try to keep your eyes away from sensationalist headlines, as media critics from all over the political spectrum will clog up news about tax reform with their own partisan bias. Instead, rely on the consistent advice of your financial experts, and be sure to keep your eye on the fundamentals like how your deductible might change when considering your future prospects. The Tax Cuts and Jobs Act may not have solved America’s ongoing political dilemmas overnight, but it’s gone a long way towards ensuring the economy remains in good health and that wealthy Americans remain confident and capable of investing in it for years to come.
Cost accountant with major focus in SAP/General Fund Enterprise Business System (GFEBS). Also, main functional inspector for accounting/finance audits for internal reviews as well as the Statement of Budgetary Resources audit initiative.