After just 10 minutes of scrolling through anyone using #TaxReform, I concluded that a majority of people really have no idea what tax reform actually means for them and their personal financial situation.
Unfortunately, the sad reality is that most Americans are financially illiterate, and not just about taxes.
To that point, about 66 percent of Americans cannot pass a basic financial literacy test, with “basic” being the operative word here, according to a 2016 Financial Industry Regulatory Authority survey. Let’s be honest, most Americans are just not savvy when it comes to financial matters. A recent study found that 57 percent of Americans have less than $1,000 in their savings account. Meanwhile, U.S. consumers owe $1 trillion in credit card debt. So, it should come as no surprise that the average person has no grasp on what tax reform may mean to them.
Tax reform, as the name implies is about taxes, and taxes, by their very nature, are anything but simple. Even a financial whiz like me hires a tax professional to get down and dirty with the numbers each year. So, the odds that the average person knows enough about taxes (as they stand today or in general) to comprehend how any type reform would affect them seems like a serious stretch to me.
The truth is that anyone getting overly passionate about this subject is most likely just hearing what they want to hear or letting their emotions get the best of them. The good news is that you can change this behavior by educating yourself about the subject. When it comes to taxes, your friends at the American Institute of CPAs can help you take the first steps.
Even if you ask a tax professional, the fact is that we simply don’t have enough information to know how the proposed changes would impact an individual taxpayer. Therefore, at this point, it’s impossible to say which taxpayers will benefit and which will be hurt under this tax reform plan. The framework is painted with broad strokes, leaving things open for interpretation and the need to use of a wide range of assumptions to calculate a single tax return.