Secrets Not Discussed in The 2017 Tax Plan
Continuing the discussions on the tax reform bill 2017, I would like to highlight a specific portion that holds potential implications for more people then what the media is sharing. This specific area of the GOP tax plan is the elimination of the Student Loan Interest deduction.
The Student Loan Interest deduction is intended to reduce the taxable income for payers up to $2500.00 helping to offset interest payments made on student loans accumulated. Most of the population seems to only be focused on what the media discusses as the only impact being against students and graduates holding loan debt for education.
Looking further to outside that box, and it can easily be inferred what the long term affect of this legislation portion holds.
First, for the current, soon to graduate or already graduated students holding proportionally large student loan debt. This deduction allows you to reduce your income level, lowering your tax burden. Which is a small amount of assistance but still beneficial. Losing this deduction would invariably drive you to seek employment on a level of income provided versus opportunity for growth and knowledge.
Why? You may ask. Well the simple answer is the Student will desire to reduce the term of the loan, reducing the amount of interest accumulated. They will need to work more hours, earn more money, to pay the loan down faster. Does this reduce the taxable income for them though? No, it only creates the double damage effect and could make graduates and anybody holding student loan debt to wait and see.
Second, for the owners of businesses or companies looking to hire qualified candidates. This could create significant trouble for you. Wage competition would increase, less qualified or capable candidates would accept what you can afford and you will be left to watch your company struggle or fall apart because you can’t compete. I know this may seem extreme, but look after the housing crises, how many on unemployment looking for work simply gave up looking when they couldn’t find something comparable to what they had.
Third, we are a nation built on the backs of dreamers, innovators, masters of business, and laborers. Graduating professionals desiring to venture into the unknown waters of self-independence by starting a business will be less intrigued should they be caught in the fallout of higher taxable income. We will have less new business growth, less innovation and ideas, because the graduates professional will only have focus towards paying the extremely high loan debt off.
In summary, this is just a few of the potential fallouts from the removal of tax liabilities through given deductions. I didn’t even touch on the affects facing parent co-signers should their children be unable to meet the high repayments of student loans. My suggestion is to look at all points in the proposed 2017 tax plan, and if you have any further questions. Give the professionals at the Center a call at (618) 997-3436 or email at info@taxplanning.com for more information on how the 2017 changes could affect you.
