Much has been written about who would win or lose under the Trump administration’s proposed federal income tax reform, but some tax analysts say there’s really no way to tell from the limited information that has been made public.

A nine-page tax reform “framework” document released Wednesday is missing critical details such as where the individual tax brackets would begin and end, whether certain deductions for businesses would go away, and what would happen to capital gains taxes. Without that information, it is impossible to know which groups would benefit – or be hurt – by the proposed changes, according to one local tax accountant.

“What we’re looking at now, it’s almost worse than Cliff’s Notes,” said Stanley Rose, a director in the tax practice at accounting firm Baker Newman Noyes in Portland. “They just don’t have much of any detail that would let us know how much it would really impact anybody.”

The framework document’s promise to double the standard deduction for individual taxpayers received a lot of attention this week, but tax analysts said other proposed changes to the tax code appear to offset much of the savings. Some families might actually have to pay more in taxes than they do now, even with the higher standard deduction, they said.

“The summary states that the standard deduction would be combined with the personal exemptions – so it’s not really a doubling,” said Peter Werwath, owner of Werwath Associates in South Portland. “Actually, it’s a 15 percent gain in nontaxable income for most filers and only 3 percent for senior filers. Not to mention that all deductions for dependents would be eliminated.”

Even more importantly, the framework does not specify income thresholds for its three proposed tax brackets, Rose said.

The framework proposes reducing the number of tax brackets from the current seven to just three. The existing tax brackets are at 10, 15, 25, 28, 33, 35 and 39.6 percent, and the framework proposes brackets of 12, 25 and 35 percent.

But the framework does not specify the income level at which the tax rate would increase from 12 percent to 25 percent, or from 25 percent to 35 percent. That missing detail makes a big difference, Rose said.

For example, an individual whose income currently tops out in the 28 percent tax bracket might end up in the 25 percent bracket or the 35 percent bracket, depending on where the line is drawn. But that information is not included in the framework.

“We just don’t know where these (brackets) will kick in,” he said.

The framework proposes reducing the corporate income tax rate from 35 percent to 20 percent, which seems like a huge win for businesses. But Rose said that might not be the case if common deductions are also eliminated, such as the one for interest payments on business loans.

The framework touts the idea of eliminating most itemized deductions for individuals, but it does not say whether it would take the same approach toward businesses. Eliminating deductions could offset any benefit to businesses from the lower corporate tax rate, Rose said. Complicating matters in Maine is the large number of small businesses that report business income as personal income, such as partnerships, limited liability companies and S corporations.

Another issue is long-term capital gains, Rose said. Currently, income from investments is taxed at a maximum rate of 20 percent, about half the 39.6 percent maximum rate for regular income.

The framework doesn’t indicate whether capital gains would continue to be taxed at a lower maximum rate, or whether they would be taxed at the same rate as regular income under the proposed tax reform. A revised tax code that taxes capital gains like regular income could offset any other benefits to wealthy taxpayers, such as a lower maximum tax bracket.

“It’s just totally silent,” Rose said about the framework. “No mention of what will become of long-term capital gains.”

AARP spokesman Josh Rosenblum said the organization isn’t able to determine whether the proposed tax reform would help or hurt most seniors based on the scant information that’s been made available.

“Our national legislative folks are reviewing the latest framework for any impact it may have on older Americans and look forward to seeing more details in the days ahead,” he said, “but at this point, without more detail or actual legislation, we don’t want to speculate about what may or may not be in any package that could have an impact on Americans aged 50-plus, including those saving for retirement.”

J. Craig Anderson can be contacted at 791-6390 or at:

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