IndexThe Power of TaxesTypes of TaxesPrevious Presidential Tax PlansSome NumbersThis document focuses on what taxes are, where the first income tax began , where we are today and how , where we are today impacts our agricultural community. Many presidents before Trump signed tax cut bills in hopes of making taxes easier on one class or another. When tax cut bills are signed into law, they are pro-Americans that stimulate the economy and may even encourage Americans to save, invest, and work for more money. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay In December 2017, President Donald J. Trump signed the Tax Cuts and Jobs Act (TCJA). This document was intended to help middle class taxpayers. This document made significant changes to income tax deductions and tax rates along with many other provision changes. This document makes it much easier for average families so they don't have to itemize their deductions. This document is expected to stimulate the economy in the near future. President Trump is taking matters into his own hands to make sure Americans are taxed fairly and constitutionally. The Power of Taxes Taxes have been a burden and a blessing to families for several generations. A burden because no one wants to shell out money from their paycheck every week, where half of it you're still wondering what it's for. A blessing because we would not have proper road systems, plowed roads, Medicare/Medicaid systems, Social Security, and so on. Having all of this has helped almost every single American in the United States, whether they realize it now or not. In December 2017, President Trump signed the largest tax overhaul since 1986. It created simplicity as taxpayers will no longer have to itemize their deductions, but it will take them longer to fill out their tax forms. “It will increase health care premiums and reduce health insurance coverage. It will affect activities in many sectors, including state and local government spending, charitable organizations and housing.” In 1862, while the Civil War was raging, the United States Congress introduced the first form of income tax. People earning six hundred to ten thousand dollars were taxed on average around 3%, while earning more than ten thousand was subject to a higher tax, and so on. In 1913 the Sixth Amendment was created as the tax system was now permanent. The United States Constitution states that “Congress shall have power to lay and collect taxes of income, from whatever source it arises, without apportionment among the several States, and without regard to any census or enumeration (Constitution).” Collections by US citizens in 1918 exceeded one million dollars. In 1920 there were over five billion. This made taxation the primary revenue for the US government. Types of Taxes Consumption Tax A consumption tax is a tax based on money spent, not money earned. It is also associated with sales taxes that differ in different states. Sales taxes are used to raise revenue and may be taxed on certain goods. Such as gas, alcohol, clothes and food. Progressive Tax A progressive tax is one that increases with the amount of money the individual earns. In America, the system is set up so that the upper classes pay more than the middle class and so on (Smart Asset). An advantage of the progressive tax is thatit leaves more money in the pockets of low-income workers who will most likely stimulate the economy and spend more. Regressive Tax A regressive tax is different from a progressive tax in which the rates are lower for the wealthy or are flat. Fixed taxes are described as being the same amount that everyone has to pay, but depending on your income level, you will obviously pay different amounts. Proportional TaxA proportional tax means that all income levels will pay the same proportion in taxes. As explained, proportional taxes are identical to regressive taxes. These two types of taxes are the same at the state level, but not at the federal level. During the 2012 presidential campaign there was a lot of fuss over the 9-9-9 plan. This included a 9% business transaction tax, a 9% income tax, and a 9% federal sales tax. Property taxes are paid on land, real estate, and commercial real estate. Most people don't own a home because rental property living is less expensive due to all the taxes that come with owning your own home. Inheritance/estate taxes Inheritance tax is determined by the net assets of the deceased. This tax carries the privilege of passing your assets to your heirs. There are federal estate taxes, but inheritance taxes are only legal in some states. Payroll Tax Payroll taxes occur when you receive a paycheck and your state taxes you on the money you earn. There are also other factors that affect payroll taxes, you can opt for a 401K or a healthcare plan. Plus, there are federal taxes, Social Security, and Medicare. These are the most common taxes for every person who works on books in the United States. These are the taxes you could recover when filing your taxes. Income Tax Income taxes are self-explanatory. The government taxes you on the money you earn. This type of tax is marginal, so everyone pays something different depending on the tax bracket they are in. Trump changed these tax brackets, as I will explain later. The President's Previous Tax Plans Between 2001 and 2018, tax cuts continue to significantly reduce federal revenues and cut taxes and benefit American families. Most of which in the Bush era were tax cuts to the wealthy and wealthy classes. While in the Obama era there were cuts to the middle and lower classes. It is estimated that by the end of 2025, tax cuts will reach $10.6 trillion, with more than two-thirds of that going to the top 5%. Below I have shown a major tax law enacted from 2001-2017 for each president. The Economic Growth and Tax Relief Reconciliation Act of 2001, signed by President George W. Bush, was one of America's largest tax cuts. “This law introduced a new low tax rate of 10%, increased the child tax credit, adjusted tax brackets for married couples, and reduced the top 4 tax rates.” Helping families make ends meet and get higher returns or simply lower payouts. The American Opportunity Tax Credit, adopted in 2009 under President Obama, allowed families and students to obtain a tax credit of up to ten thousand dollars over a four-year college career. This meant that students or parents of students could apply for reimbursement of university expenses and have the opportunity to recover some of that money. Usually, in my case, the money is received by the student's parents because the student may not earn enough and it will have to be claimed in the parents' name. Even if the student hasonce those expenses are paid, the parents will recover the money. This tax credit law has saved thousands of families. Signed in December 2017, President Trump signed the bill into law, which made significant changes to income taxes. While these changes are temporary and will end in 2025, the changes will revert to their pre-TCJA state. “These changes include a nearly doubling of the standard deduction, new limitations on itemized deductions, reduced income tax rates, and reforms to several other provisions. Overall, these changes simplify individual income tax by eliminating the need for millions of families to itemize their deductions.” The Tax Cuts and Jobs Act reduced tax levels in each tax bracket shown in Table 1. These levels are set for inflation as GOOD. Income tax is the highest revenue for the United States government. The cut in government revenue is positive in the hope that it will stimulate the economy and create more jobs as money flows. The TCJA is prepared to do so. Until 2025, because the TCJA is temporary. Previously, before the TCJA, the child tax credit was a $1,000 write-off for each child under seventeen. This tax was phased out when joint income exceeded $110,000 and $75,000 for singles. Currently, with the TCJA in full swing, the write-off for children under seventeen is now $2,000. Furthermore, the joint income is now less than 400,000 and the single fill is less than 200,000 to be eligible to claim your children, which in my opinion is substantially high. Unlike pre-TCJA, these deductibles are now only offered to children who have a Social Security number, which is good because there have been cases where "parents" have claimed that their children shouldn't get a tax refund anymore high. There is now also a $500 credit for any other dependents that the filer can claim. Making this more beneficial to taxpayers because since the age limit for claiming your children is seventeen, some kids live in their parents' home for a while after finishing college and the average age to graduate is twenty-one. This is also advantageous for the taxpayer because he can claim any other adult in the household to whom he provides financial support. For example, their parents who come to live with them at an older age. The Tax Cuts and Jobs Act nearly doubles the standard deduction by changing the previous deduction from 13,000 to 24,000 for joint filers and from 6,500 to 12,000 for single filers. This was done intentionally to reduce the number of taxpayers itemizing their deductions. The TCJA limits each individual household in each state to just $10,000 in itemized deductions each year. The TCJA has now made better deductions for pass-through entities. A pass-through entity is “a special business structure used to reduce the effects of double taxation. Pass-through entities do not pay corporate-level income taxes. Instead, corporate income is shared among the owners and income taxes are collected only at the individual owner level.” Some examples of pass-through entities would be an LLC, partnerships, title companies, and LLCs. Some Numbers These deductions include a 20% reduction on qualified business income (QBI), regardless of what type of pass-through entity they may be. For example, if your qualified business income was $150,000, there would be a 20% deduction on that figure and you would only have to pay income taxes on $120,000.”