The administration of President Trump released its tax proposals in late April. The proposals did vary somewhat from initial proposals presented during the campaign, but adhered to the basic principals of tax reform of broadening the tax base while lowering tax rates.
Markets are anxious because it may take months before there is an indication whether any portion of the tax proposals actually convert into tax legislative law.
Administration officials stated that the reduction in tax revenue generated by the tax cut proposals would be offset through a combination of anticipated economic growth and various broadening measures.
Once the Budget Proposal for Fiscal Year 2018 is submitted by the White House in mid-May, then Congress will begin the deliberation process of the tax proposals.
Affecting most every taxpayer in the country is the standard deduction. The proposal essentially doubles the standard deduction from its current levels, thus simplifying the entire tax process for many tax filers. This is so because the standard deduction is used instead of itemizing expenses in various categories. The Tax Policy Center estimates that those who itemize would fall from 30% to 5%, hence spending less time on identifying expenses to deduct and less of a burden on the IRS.
Ironically, one of the proposals actually hinders homeowners that have expensive homes, primarily in Democratic California and New York. Senators from both states are expected to rebuff the elimination of the state and local property tax deduction, seen as a significant deduction for residents of these expensive coastal states.
Sources: whitehouse.gov, Tax Policy Center