The Tax Cut and Jobs Act of 2017

The substantial changes made to the tax provisions by the Act 

The first significant variation in the tax system is the standard deduction. The new tax regulations almost doubled the standard deductions for the individuals. Therefore, this reduced the cumbersomeness in calculating taxable income through itemizing. Consequently, more people prefer the standard deduction strategy, compared to the previous itemization. Notably, the last personal tax exemption was scrapped and catered for in the child tax credit and the standard deduction cumulatively (Lessem, 2019). Currently, the majority of the taxpayers determine their taxable income through the traditional assumptions rather than the previous calculations of all sources of income, subtracting the deductions to realize the tax payable. 

Additionally, the most appealing change was how the variations in tax were presented. For instance, the child tax credit was advanced so that households have an extra disposable income in their pockets. Therefore, the removal of personal exemption became insignificant, due to the benefits gained through the substitute policies instilled. Besides, the standard deduction is incredibly significant to the household. The premises doubled the previous credits. Also, it is realizable that this change has benefited every individual from the low earners to the most paid employees. However, the standard deduction rule is customized to benefit more the low and middle earners than the high-income earners. 

Again, the new tax cut and jobs act eased the complexities in the family provisions. The law removed the personal exceptions and compensated it with an expanded child tax credits. In return, the child tax credit doubled from 2018 for the deserving children under the age of 17. This change eases the entire tax process. Regarding the increased standard deductions, the new rule limited some itemized deductions such as mortgage interests and other minor itemized deductions and state and local taxes. 

The impact is it likely to have on our GDP and government's budget. 

First and foremost, the new tax regulations are extraordinarily beneficial to the household's level of disposable income. Notably, the previous law on itemized deductions was too costly for the individuals. People spend much time summing up their revenues, calculating the deductions and coming up with the final figures. The time consumed in this process was a loss to many who would have invested the moment in productive activities. Therefore, this change freed crucial time for the public to continue with their economic activities which in return, add up to increased GDP. 

Again, the doubled standard deduction has positively benefited the individuals and the government indirectly. This standard deduction ensures more disposable income for the households. Additionally, the increased child tax credit increases the available income for the families. The Act has attracted many new entrepreneurs into the market (Coen-Pirani & Sieg, 2019). Again, the production cost is low, while the returns on investments are high. In return, the increased disposable incomes increased the aggregate demand, private investments and the aggregate output. Furthermore, the employment rate has increased, resulting again to increased public income and economic prosperity and individual welfare. Therefore, the national production and per capita income have increased, hence the GDP. 

Consequently, to the reduced tax burden on individuals, the government's budget is relieved, and the BOP has positive change. However, much of the federal revenue comes from the income tax. Therefore, the gains have significantly decreased. Nevertheless, the government's expenses have also reduced, more considerably than the payments. Again, there is a shift of revenue avenues from the taxes to the output and exports. In the long run, people's welfare will be stable, and the government will benefit more from external factors other than taxes. Therefore, the budget has shifted and decreased, from spending on non-developmental projects like grants, catering for basic needs and poor people to developmental projects. More fund is now channelled to other investment avenues, and expenses do not pressure the budget. 

How the changes have affected me personally 

These tax changes have greatly encouraged my economic life and ambitions. First, the simplified tax system is an added advantage to spend more time performing my financial duties which will assure more profits. For instance, when operating a service-oriented enterprise, I have more time to attend to my clients and earn more money. Previously, I would spend that time calculating my payable taxes. Again, a fair tax system is a massive motivation for me. I can now comfortably indulge in any economic activity, be it investment or employment. 

In the employment sector, wages have increased due to the high profits compared to the production cost. Additionally, the income tax on my wages is minimal and not much significance to my salaries. On the other hand, I may opt to accumulate my savings from what I earn and invest in the business. The advantage is that I am assured of high demand since individuals have more disposable income. Again, reduced government taxes ensure that I will gain lucrative profits. 

Precisely, though the tax cuts, I can meet my primary and secondary needs effortlessly than before. The high productions avail more goods and services in the market. The prices are fair. Above all, I have the substantial disposable income to purchase the goods, save and invest. Significantly, currently, I can afford much of my needs than previously. 

Additionally, new tax procedures are precise and straightforward. Therefore, I find it easy to file my returns than before. Again, I can hardly encounter errors when filling my returns today. Consequently, the chances of evading tax obligations are relatively minimal due to the easy strategy instilled. 

Does everyone benefit from the changes in tax provisions, or does it favour one group over others? 

This new tax law benefits everyone across the country. Firstly, the individuals who are employed are gaining since the amount of tax they would have to pay from their income is reduced. Consequently, the increased disposable income can create a rapport for the household to invest, save and attend uncertainties promptly and without financial constraints. The poverty rate has since the implementation of this law reduced. Therefore, the law has dramatically benefitted individual households in different dimensions. Again, the prices of products have significantly decreased. This aspect has consequently availed goods and services to consumers at preferable prices. Also, regulation has attracted demand for labour and high wage rates. These factors have significantly benefited individual households. 

On the other hand, firms, enterprises and employers have also gained from this law. The simplified tax returns procedures made it possible for employers to incur minimum costs in filing their returns. Again, the tax reduction has benefitted the companies by reducing the cumulative production cost. Additionally, the increased demand for goods from the households, encourage more output, supply and finally more revenues are gained. Again, the tax act has inspired the foundation of more firms due to the favourable environment for producers. Similarly, the movie makes it possible for producers to pay high wage rates, employ more labour and in return, the aggregate gain increases. 

However, the tax act does not benefit the individuals uniformly. Notably, the tax rate on income earned from low to high-income earners increases progressively. Therefore, the low and medium earners gain more from the new tax law than the high salary earners. However, this move is essential in the economy to balance the economic status and redistribution of wealth. This norm creates equitable share across the economy. Therefore, although the Act does not benefit the groups equally, it is the perfect economic move to ensure equity in the economy. 

The changes I agree and disagree with. 

Regarding the implemented tax act, I would much encourage its effect that criticize it. I agree with the decision to double the standard deductions for the income tax. This move is essential for boosting the economy, and the living standard of the people, The GDP, per capita income and the welfare of the citizens. Hence, these factors are perfectly catered for in the current tax act. Again, the increasing employment rates are as a result of the above tax law. Therefore, this move leading to increased income for the people is quite beneficial than harmful. 

Additionally, I support the law's recognition of the time consumed in filling itemized deductions. This action has, since implementation, created much wealth for the household and firms. Again, the movie has no negative impact on anyone or any sector in the economy. Notably, all the outcomes of this aspect are beneficial. Also, the decision to replace personal exceptions with increased child tax credit and more standard deductions has removed the unbalanced benefits in the deductions. I recommend the move since today; everyone enjoys the deductions equitably. On the child tax credit, families are enjoying the speculations regarding the number of kids, which as a fair and just procedure. 

However, I do not fully endorse these tax reductions to take a course in the long term. The consequences of the declines in government revenues may end up being adverse. Already there is a significant drop in the total national income. Although reduced government expenditures may compensate the tax reduction, the economy is never static, and hence there is need always to regulate the tax laws overtimes. 

Possible changes I would make in this new law. 

There are minimal changes I would prefer for this tax law. Notably, the law is economically encouraging and motivating for the economic payers to venture into investments without much fear. However, there are several changes I would propose on the revision of this tax act. First, the tax came at a time when the country was experiencing a low unemployment rate and a large gap between the poor and the rich. Again, the provisions to lower corporate taxes and large tax gap enrich the haves but not the have nots in the long run. Therefore, there is a need to edit the tax to consider reducing the wealth gap, other than creating employments. Again, this tax I customized in a way that it reaps money off from the future generation. The problem here is that the tax is deficit-financed. Therefore, in the long run, the debts will be paid by the future generations who did not enjoy the tax benefits. This move is economically imprudent and ought to be corrected so that all the ages are justly considered. 

Again, there is a need for corrections with a future orientation to avoid economic crisis and recession. For instance, although the citizens are gaining, the benefits may be short-earned due to the dynamic economy. The wealthy with the firms are anticipated to achieve more than the low and medium earners. Again, the economy, in the long run, is projected to recess rather than grow. Therefore, there is a need to change the law to avoid complexity to the policymakers when deciding on future economic goals. 

My own opinions on the Tax Cut and Jobs Act, 2017 

In my own opinion, the tax act is necessary for a short term economic boost, especially this moment of a pandemic. Again, the increased disposable income is an added advantage to people willing to engage in businesses to invest. Therefore, if the society gets enough knowledge of future implications of the law, they would take advantage during this period. Invest much of their extra income. the impact of the tax on government's pay is that the revenue may drastically decrease and affect the balances of payment with time. Therefore, the government must be keen not to turn into massive and economically unhealthy borrowing, which can result in an economic crisis. 

Additionally, the tax should be revisited after some time to change it with the changing economic situations. This tax act should not be fixed nor unchangeable. Therefore I would advise the economic policymakers and the legislature to be flexible on the regulations so that it conforms to the prevailing financial situations. 

References 

Coen-Pirani, D., & Sieg, H. (2019). The impact of the Tax Cut and Jobs Act on the spatial distribution of high productivity households and economic welfare.  Journal of Monetary Economics ,  105 , 44-71. 

Lessem, R. (2019). Comment on “The impact of the tax cut and jobs act on the spatial distribution of high productivity households and economic welfare”, by Daniele Coen-Pirani and Holger Sieg.  Journal of Monetary Economics ,  105 , 72-73.