Posted on 10/17/2017 10:40:51 AM PDT by TBP
Trying to advocate his tax-reform proposal, President Trump insisted: “It’s not good for me. Believe me.”
He shouldn’t have said that.
His statement offered an easy target for the plan’s opponents, who promptly howled that his nine-page framework is a handout to the rich. “Trump’s tax plan benefits wealthy, including Trump,” cried a New York Times headline.
The president missed the point. His plan is good for him. But it’s good for the rest of America, too.
Trump’s framework will improve life for everyone: It offers direct benefits to the middle-class, encourages economic activity, and reduces the time citizens will spend paying taxes. It looks for long-run solutions and recognizes that the economy is a dynamic market in which tax cuts have ripple effects.
Perhaps the most significant and controversial aspect of Trump’s plan is its recognition that boons for business help people of all income levels. The plan caps the small-business income tax at 25 percent, allows businesses to write off capital investments as expenses, and cuts the corporate tax rate to 20 percent from 35 percent (the highest in the developed world).
Cutting business taxes helps ordinary people.
Businesses aren’t faceless abstractions: they’re owned by people, who hire people, who produce goods and services that help people of all classes. When businesses face taxes, they pass on the costs. More than 75 percent of corporate taxes fall on workers in the form of lower wages, according to the Heritage Foundation.
Cutting the corporate tax rate creates the right incentives: It encourages businesses to come to America (or stay here) and it reduces incentives for tax evasion. In the long run, the benefits of these policies reach middle- and lower-classes through higher wages, increased employment, and better products.
An analysis by the Tax Foundation found that the stand-alone effect of cutting the corporate rate to 20 percent could lead to 3.4 percent growth in GDP, $3 trillion in additional capital, and a 2.9 percent rise in wages over ten years.
Trump’s framework offers more direct benefits to the middle class, too. It doubles the standard deduction and promises to increase the child tax credit. It vows that congressional committees will work on “additional measures” to relieve the middle-class tax burden, and it claims to create incentives for work, higher education, and retirement security.
Eliminating the death tax on property and lowering income taxes across the board means the Trump plan will benefit the wealthy as well (although elimination of the death tax will help others, such as farmers, too). A Tax Policy Center report released Friday predicted that the wealthiest 1 percent would face the biggest tax reduction of 5.7 percent, while everyone else would get no more than a 1.4 percent. Plus, it claimed, the top 1 percent of income earners would pay an even lower percentage of all income tax than it does now.
But these are no grounds for criticism.
“It is impossible to cut income taxes and not reduce taxes on the upper half of the income distribution,” said Hillsdale College Professor of Economics Gary Wolfram, noting that the top 50 percent of income earners pay 98 percent of all income taxes.
More important, lightening the tax burden on the wealthy is only a problem for those with a zero-sum mentality who believe taxes are a way to divvy up a pie. That’s not an accurate view of the economy. Lower taxes for the wealthy doesn’t hurt the middle class. To the contrary, it promotes upward mobility and stimulates growth as the wealthy invest and spend their income.
By reducing taxes on the wealthy, Trump’s tax plan can spark innovation that will raise standards of living for the poor, Wolfram said: “Our concern should not be how rich are the rich, but how rich are the poor.”
And by simplifying the tax code, slashing its seven brackets to three (with room for a fourth) and cutting out itemized deductions, Trump’s plan will give people time back — a monetary gain in itself for a nation estimated to spend billions of hours filing taxes. The plan also takes out state and local deductions, which encourage states to increase taxes and redistribute wealth from low- to high-tax states, Wolfram pointed out.
As Congress fine-tunes the plan, it’ll be time to critique specific policies and implications — like an increased budget deficit of $2 trillion over 10 years, as some estimate. But as a framework, Trump’s proposal is a good one, incentivizing work and economic activity and reducing undue burdens on American citizens.
“This isn’t about me,” Trump should have said. “This plan will benefit me because it benefits everyone in America.”
Then, we’d believe him.
And, it will raise net taxes on those who itemize.
The author thinks the indirect benefits will outweigh this downer. But those of us who will pay more think it sucks.
And will oppose it with every breath.
How is that?
Yep...our bracket doesn’t change, but it looks like we will lose deductibility of our high state and local property taxes. We are going to get creamed...On our very first tax return after retiring and moving to a fixed income.
You gotta love government — you spend decades planning around their tax code and they change the long-standing rules when it’s too late to do anything about it. I get porked by them every time I turn around.
Every taxpayer who itemizes deducts some amount for state and local taxes...property taxes, excise taxes on the car or boat, sales taxes (even in Texas and Mississippi) or state income taxes.
Those options will no longer be available. While the standard deduction will increase and offset much of that, for those that it does they will no longer be itemizing.
Example: A single man in CA earning $130k/yr and paying a mortgage will be itemizing every year. And the increased standard deduction (single) will NOT offset the loss of itemization for all the state and local taxes.
And that’s just one example. There are several others that people have detailed here.
There is a subsection of the middle class, a fairly large one, that will see a substantial increase in net tax owed.
And they could be from any state in the Union. Even states with just a modest sales tax (which is deductible currently).
Your angst over this is warranted, but you have no idea what the end product will be when voted on in the House and Senate.
Hang in there.
When the anti-constitutional republic Progressive Movement successfully spooked citizens to put pressure on their state lawmakers to ratify the ill-conceived 17th Amendment (17A), state legislatures foolishly gave up their voices in Congress, effectively repealing the whole Constitution by doing so imo.
As a consequence of 17A, the corrupt Senate has been helping the likewise corrupt House to tax and spend for all kinds of things that the states have never given the feds the express constitutional authority to tax and spend for, Obamacare a great example.
So patriots are reminded that Trump’s ultimate tax plan is to lead the states to repeal 17A imo. (The 16th Amendment can disappear too.)
After 17A is repealed and patriots support Trump in leading the states to put a stop to unconstitutional federal taxes, taxes that Congress cannot justify under its constitutional Article I, Section 8-limited powers, the states will probably find a tsunami of new revenues that they won’t know what to do with.
For starters they can start their own individual healthcare and retirement programs, increase funding for public schools, police and fire departments, and repair infrastructure.
“Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” Justice John Marshall, Gibbons v. Ogden, 1824.
"State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress [emphases added]." —Gibbons v. Ogden, 1824.
”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.
"The smart crooks long ago figured out that getting themselves elected to federal office to make unconstitutional tax laws to fill their pockets is a much easier way to make a living than robbing banks." —me
"Federal career lawmakers probably laugh all the way to the bank to deposit bribes for putting loopholes for the rich and corporations in tax appropriations laws, Congress actually not having the express constitutional authority to make most laws where domestic policy is concerned. Such laws are based on stolen state powers and uniquely associated stolen state revenues." —me
Patriots need to make sure that there are plenty of Trump-supporting, state sovereignty-respecting patriot candidates on the primary ballots and pink-slip career lawmakers by sending patriot candidate lawmakers to DC on election day 2018.
It is too early to tell if your final tax bill goes up. First, state and local taxes are currently limited by the alternative minimum tax and many folks are not benefiting from the that tax deduction. Second, the proposals are supposed to include an increase in the standard deduction and a decrease in tax rates. These changes may offset the benefit of those tax deductions.
In addition, I have followed tax law changes and the actual outcome is sometimes very different that the ultimate law.
Yes, all we know at this point is what the proposal is.
But I’ll not advocate for the proposal as is. I will be opposed until I see a bill that does not raise my taxes.
The elimination of the state and local deduction has Paul Ryan’s dirty fingerprints all over it. It’s his baby. And he won’t let go of it - like a junkyard dog.
If they’re going to cut rates, they have to soak someone. And the group they’re choosing to soak are middle class, hard-working Americans.
This wasn’t what President Trump campaign on or promised. If this passes, he will lose the support of millions of Americans who voted for him. This is a stupid, bad deal.
I propose we advocate for tax reform.
I also propose we advocate for tax reform that lowers all taxes.
We don’t need offsets to pay for the tax cut.
We don’t need to defeat the goal of freeing up more money into the private sector.
A tax increased to one segment, nullifies the tax decrease to another. We want to increase private sector funds to produce a boost for the economy, new jobs, higher government revenue through more employed people.
I don’t blame you for objecting.
I do want to get things going, so I’ll support it for now, but if the final bill raises your taxes, I’ll be fighting against it with you.
My goal is tax relief on our 2017 tax year filing.
I want everyone to pay less money between now and April 15th, 2018.
“If they’re going to cut rates, they have to soak someone. And the group they’re choosing to soak are middle class, hard-working Americans.”
Middle class taxpayer will end up subsidizing a tax cut for the lower-middle classes (<$75k/yr), the poor (increased EITC) and the rich (lower max rate from 39 to 35%).
Plus a reduction in the corporate rate (this is a VERY GOOD thing from 35% to 20%).
All on the backs of a class of people who pay the vast majority of all taxes today. Those between $80k and $160k/yr.
If it proceeds, I will actively oppose Trump in 2020 just as I am actively opposing every Republican in Congress this cycle.
“We don’t need offsets to pay for the tax cut.”
Less than 1/2 of Congressional Republicans will vote for such an approach. And ALL Democrats will be opposed due to partisanship.
I think the idea is to create a revolt in teh high-tax states to make them lower their taxes. Who knows if that strategy will work?
There is no information here. We need to know the tax brackets. We need the dollar amount when you go from one bracket tot he next. With those specific numbers nobody knows anything.
I hope you’re right.
I’m a retiree and the tax plan will hurt me personally. I already contacted all my reps and the White House itself with my concerns. But if the objectionable portions are pushed thru, where does a voter go? The Democrats are even worse. It’s quite depressing.
“I hope you’re right.”
Which part?
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