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There is more bad news for taxpayers. A government report revealed that 11 million taxpayers are losing $ 323 billion in deductions due to a punitive change in President Donald Trump's tax law.
The harsh news comes after the first registrants were stunned by the reduction or even the disappearance of tax refunds.
The deduction portfolio detailed in the government's report focuses on capped deductions for national and local taxes, including property taxes. Previously, all local taxes could be deducted from federal taxes; it is now capped at $ 10,000, particularly for homeowners in large metropolitan areas – particularly northeastern and California – where housing tends to be more expensive.
The cap was imposed to help finance the huge tax cuts granted to corporations, whose taxes were reduced by 40%, from 35% to 21%.
The deduction is so staggering that it could end up overwhelming the modest gains that taxpayers were expecting because of tax cuts.
The figures were revealed by an audit of the Inspector General of the Treasury for the Tax Administration, which examined the efforts made by Treasury Secretary Steven Mnuchin to prevent local governments from preventing the federal government to take additional action against the inhabitants of the community.
Several states – including New York and New Jersey – challenge the deduction ceiling in court, claiming that the new tax law is unconstitutional because of the excessive breadth of federal legislation and the harm done to certain states and their residents.
Tax refunds also decreased significantly – 17% – for the first three weeks of the filing season this year (ending February 15th) compared to the same period last year. But by the end of the fourth week, total repayments had reached 1.3% compared to the same period last year.
The ultimate status of taxpayers and how they will behave fairly according to demographics will not be fully known until after the end of the tax season.
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