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3 ways you could be affected by the $2.2 trillion GOP tax plan

President Donald Trump meets with Speaker of the House Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) and other Republican congressional leaders about tax reform at the White House in Washington, DC, September 5, 2017.
Joshua Roberts | Reuters
President Donald Trump meets with Speaker of the House Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY) and other Republican congressional leaders about tax reform at the White House in Washington, DC, September 5, 2017.

President Donald Trump and the Republican leadership in Congress unveiled an outline for tax reform this week.

The new plan is expected to benefit corporations as well as the wealthiest Americans, which includes Trump himself and various members of his Cabinet. The estate tax repeal alone would save Trump $564 million, Wilbur Ross $545 million, Betsy DeVos' father-in-law Richard $900 million, and Linda McMahon $250 million, reports Bloomberg.

Though advisor Gary Cohn claims cuts will be offset entirely by robust and sustained economic growth, skeptics call that "impossible": The plan could cost $2.2 trillion and "add a substantial amount to federal debt," according to an initial assessment by the fiscally conservative Committee for a Responsible Federal Budget.

Still, even if you're not a billionaire, a CEO or a policy wonk, there are good reasons to pay attention. Here are three ways that this tax reform effort could affect you.

1. Your taxes might actually go up

"Dozens of lucrative tax breaks in the current tax code may be eliminated," writes CNBC's John Schoen, including "a popular deduction for taxes paid to state and local governments."

That will hit you hardest if you live in a blue state and especially in the New York metro area, California, Maryland or Massachusetts.

The damage to itemizers in those areas could amount to an extra $1,600 to $3,500 a year, according to Politico.

Middle-class homeowners, those who make between $50,000 and $200,000 a year, could see taxes rise by average of $815, warns the National Association of Realtors, and single female homeowners will be hit hard, reports Dame Magazine: "If the GOP plan passes this fall, come April this homeowner would be on the hook for an extra $570 in federal taxes compared to what she owed in 2016."

2. Interest rates might go up, too

"If the tax plan were truly successful in boosting growth significantly (which is questionable), then Americans might well need to brace for higher interest rates," Mark Hamrick, senior economic analyst at Bankrate.com, tells CNBC Make It in an email.

That means borrowing money and using credit becomes more expensive. It can also mean prices go up and consumers do less shopping and spending. On the plus side, higher interest rates can help you save more money.

3. The plan might actually hurt the economy

In its analysis, the CRFB says this reform plan is not "fiscally responsible" and points out that "tax reform that adds to the debt is likely to slow, rather than improve, long-term economic growth."

Tax cuts in the recent past have often netted poor results. Ronald Reagan's administration promised his cuts would pay for themselves, and "used this tactic to pass big 'supply side' tax cuts in 1981, and George W. Bush updated it to pass another big round of cuts in 2001. In both cases, the result was the same: bigger deficits and more debt," writes the USA Today editorial board.

"Too many tax cuts, like too much beer, can be a problem," it adds. "Supply-siders advocated big state tax cuts in Louisiana and Kansas, for example, promising explosive growth. Instead, job growth in both states has lagged the national average, and the lost revenue blew big holes in the states' budgets, leading to destructive cuts in education and other vital programs."

In the same way, if Cohn is mistaken and the skeptics and historians are right, tax cuts could leave America cash-strapped and less able to pay its bills — let alone take risks or act on priorities such as expanding access to health care or paid family leave.

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