I am looking for the attachment points in the Tax Plan that would tell us how to apply the 10%, 25% and 35% to taxable income.
The tax rate on incomes from 0 to $12,600 is Zero. For every dollar of taxable income earned, the low rate would be 10%. So, a single taxpayer who makes $20.000 a year would pay zero on their first $12,600 and 10% on $7,400. Their tax would be $740 for the year. Their marginal tax rate would be 3.7% (740/20,000). The tax for 2016 for 20000 was 2540 or 12.7%
If the 25% rate kicks in at $37,500 of taxable income for single filers, then income over $37,500 would be taxed at 25%. So, everyone who has a taxable income that totals $37,500 would pay 10% on $24,900 or $2,490 for the year. Their marginal tax rate would be 6.64% (2490/37500) The tax for 2016 for 37500 was 5165 or 13.77%
If this is all true, then a single filer with a taxable income of $75,000 would pay 10% on $24,900 or $2,490 plus 25% on $37,500 or $9,375. Their total tax would be $11,865. Their marginal tax rate would be 15.82% (11865/75000) The tax for 2016 for 75000 was 14528, 19.37%
IRS 1040, 2016 Tax Tables show:
The tax for 2016 for 75000 was 14528, 19.37%
The tax for 2016 for 37500 was 5165 13.77%
The tax for 2016 for 20000 was 2540 12.7%
It looks like all taxes go down. I couldn’t find a single tax bracket table that confirms my numbers, but I did have some clues from the articles from the NY Times and Business insider.
If the 35% tax rate remains on incomes above $470,000 as it does now, that would mean that the attachment point for the 25% rate is somewhere between the low and high attachment points.
The plan would reduce the top rate on individual income tax now 39.6 percent for income over around $470,000 for a married couple — to 35 percent
What the plan does not detail are the income levels associated with each bracket. Currently, for instance, a joint filing couple making between $18,650 to $75,900 pays a 15% marginal rate. It's unclear where that level of income would fall under the Trump plan.
For instance, if the new bracket for the 10% rate only extends to married couples making up to $75,000 annually, Americans making $75,001 could see that additional income be taxed at the 25% marginal rate instead of the 15% rate.
In response to a question, Cohn said a family of four making $60,000 would have a lower tax rate, but did not provide further details.
Norb Leahy, Dunwoody GA Tea Party Leader