Millennials can be thankful for the GOP's tax reform proposal

Millennials can be thankful for the GOP's tax reform proposal

Never underestimate how much millennials love dogs. A survey conducted by SunTrust Mortgage found that 33 percent of millennials who recently purchased their first home did so not because of marriage or the birth of a child, but to have more space to raise their pups.

Some millennials are lucky enough to be able afford homes for their beloved four legged friends. Others are still struggling to pay for overpriced college books and basic living expenses. Even more are unemployed or underemployed.

If you identify as one of those who can’t afford to buy a home for your dog, you might be wondering if there is any way to improve your economic situation. Yes, there is. It’s called tax reform. Congressional Republicans are working on passing it as you read this article and it's going to deliver the economic boost all millennials need.

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The GOP tax plan makes that goal achievable by lowering the corporate tax rate, increasing after-tax income, and spurring economic growth. This is important for millennials because the corporate income tax is actually paid by people, in the form of lower wages. The U.S. has the highest corporate tax rate in the developed world, making it difficult for U.S. businesses to compete. The plan cuts the corporate rate from its current 35 percent down to 20 percent. Lowering the rate will dramatically increase take-home pay.

 

The corporate rate hasn’t been updated since 1986. That’s the same year that Apple released their Macintosh Plus which featured a brand new 3.5-inch double sided floppy drive. Saying our corporate tax rate is outdated is an understatement.

Lowering the corporate tax rate will help workers and consumers. A study conducted by the Tax Foundation found that lowering the corporate tax rate to 20 percent will increase after-tax income by an average of over $1,800. Regardless of income level, everyone will see an increase of at least 3.3 percent in their income. That’s extra money for paying rent somewhere that isn’t a parent's basement.

What about millennials who are unemployed, how will an income increase help them if they have no income to begin with? The second major way tax reform helps is by giving millennials the opportunity for a new job. The same study from the Tax Foundation indicates that successful corporate tax reform will create more than 592,000 new jobs and grow the long term GDP by more than three percent. The economic growth prompted by tax reform won’t just help big business. You and I will see tangible benefits in our job prospects and paycheck.

At this point you might be thinking, that sounds great for everyone else, but I own a small business, or plan on starting one. What does the GOP tax plan do for me? Three words. Full business expensing.

Tax reform will put more cash in your pocket. No, Congress won’t be performing some crazy magic trick. They’ll be passing tax reform. The plan doubles the standard deduction for individuals and couples filing jointly. This means the first $12,000 of income for individuals and $24,000 of income for couples will be tax free. Put simply, Uncle Sam is taking less money out of your paycheck. Additionally, the House plan decreases the number of tax brackets from seven to four. Higher deductions will make it easier for taxpayers to fall into a lower bracket and pay less in taxes.

Finally, tax reform makes filing your taxes easier. If you’re like me, you probably dread tax season. It’s time consuming and confusing. If you feel this way, you’re not alone. In fact, more than a third of millennials ask their parents for help with their taxes. High compliance costs burden taxpayers by compelling them to purchase tax filing software or other forms of tax assistance so they don’t screw up their taxes.

Even though it’s common for millennials to be confused and overwhelmed by the tax code, that’s not the way it should be. The GOP tax plan simplifies the tax code. By eliminating most itemization and increasing the standard deduction, filing taxes will take a fraction of the time. You’ll likely be able to do it without any help from your parents or a tax professional.

Whether you are saving up to purchase a home for you and Fido, or simply trying to afford day-to-day expenses you are going to benefit from the GOP tax plan. It is pro-growth, pro-jobs, and pro-opportunity.

Abigail Marone (@AbigailMarone) is a tax policy associate at Americans for Tax Reform, a nonprofit group aimed at promoting limited government.