On December 20, Republicans followed through on their promise to pass a tax reform bill through Christmas.
The tax plan represents the largest one-time tax decrease in American History and it should result in the majority of American citizens seeing a tax decrease the next time they pay their taxes.
While students will see an immediate tax decrease, Professor of Economics Reza Hamzaee is worried about the long-term health of the economy.
“Trickle-down economics, during President Reagan and others, did not work,” Hamzaee said. “If it did, it was temporary. The effects were a long-term disaster for the economy as we are still dealing with the largest deficit and largest debt.”
“They [corporations] are not going to hire a lot of people and offer them higher wages or something like that, unfortunately,” Hamzaee said. “Some of them do, the good companies do. So in the long term, unfortunately, my forecast is negative.”
The tax plan doubles the standard deduction ($12,000 for singles and $24,000 married couples) and lowers all tax brackets with the exception of the lowest bracket. Hamzaee says this will directly benefit students.
“They will see a benefit because the standard deduction is larger now,” Hamzaee said. “So they are going to have some of their income for which they don’t pay taxes.”
While Hamzaee will personally see cuts, he is not excited by them.
“I am going to enjoy more tax returns because of my salary and also a business investment that I’ve done,” Hamzaee said. “But do I go for it? No. I prefer to live in a society where there is stability and sustainability.”
The final bill does not include any of the changes that were in the House version of the bill that directly impacted higher education, which included the elimination of several tax credits and waivers that benefited students.
The bill is estimated to cost $1.46 trillion and also eliminates the individual mandate from the Affordable Care Act.