Posted on 10/03/2017 6:00:33 AM PDT by Kaslin
Donald Trump's latest tax-cut plan would be a steroid injection for the U.S. economy. Bravo to the White House and congressional leaders for packaging the biggest pro-growth tax cut since Ronald Reagan.
My only quibble is that I wish the "Gang of Six" negotiators had stuck with President Trump's call for a 15 percent business tax rate -- which was in the campaign plan that Larry Kudlow and I helped draft. Instead, this plan would set the rate at 20 percent for corporations (down from 35 percent) and 25 percent for small businesses (down from 40 percent for many firms). This may not be as low as Trump wanted, but it is still a vast improvement for competitiveness over the current IRS code.
For all the blather about tax cuts for the rich, the average household in the United States with an income between about $40,000 and $100,000 would save about $1,500 to $2,500 on its tax bill due to the higher standard deduction and the lower tax rates. Maybe families can use that money to pay for the higher health-insurance premiums under Obamacare. As a cab driver told me when I asked him what he thought of the Trump tax plan: "Show me the money."
But there are trip cords and land mines aplenty ahead. The GOP had better be ready to avoid another embarrassing policy defeat.
First, Republicans have to stop enslaving themselves to arcane and witless budget rules that are torpedoing their policy objectives. Paul Ryan and Mitch McConnell are letting the budget process -- which was written by Democrats more than four decades ago -- dictate the policy, rather than the reverse. Why, oh, why, are we still living under these rules of the 1974 budget act, which has created the greatest period of debt and deficits and runaway spending in American history?
The GOP controls every agency and committee of Congress. Why are they enabling the Congressional Budget Office and Joint Tax Committee to impede their policy goals? Either put people in charge of these agencies who are favorable to the policies or use outside scorekeepers who are more accurate. The CBO did severe damage to the GOP's Obamacare repeal agenda with negative and misleading reports.
We know from the Reagan tax cuts, the Kennedy tax cuts, the Clinton capital gains tax cuts and so many other historic changes in policy that the CBO and JTC often aren't even in the right ZIP code in predicting responses to big policy changes.
For example, the budget scorekeepers said that the Clinton capital gains cut in 1997 would lose tens of billions in revenues. Instead, as Dan Clifton of Strategas, an investment consulting firm, has shown, the tax cut raised tens of billions in tax collections and helped balance the budget. If CBO had instant replay, these referees would be overturned and then fired.
This is not a plea for biased scorekeepers -- just accurate referees.
Next, focus on economic growth. Too many GOP "deficit hawks" whine that America can't afford a big tax cut. Even some of my friends at National Review magazine make this claim. They're wrong.
If we continue with the last decade's low growth rate (as the CBO predicts), the next decade will give us another $10 trillion in debt. Austerity isn't going to balance this budget, and it sure won't create jobs.
Arthur Laffer, an architect of the Reagan tax plans, believes based on the last century of tax rate changes that a reduction in the corporate tax to 15 percent will juice economic growth by as much as 1 percentage point per year. If this puts millions of Americans back to work in higher paying jobs, wouldn't this be a sound investment?
Too many Republicans believe in the false narrative of the limits to growth. Even the House and Senate budget resolution predicts a measly 2.6 percent growth. This is aiming too low. The combination of stable prices, low interest rates, a newly minted competitive tax system and continued regulatory rollback can get us to 3.5 to 4 percent growth.
Trump and the Republicans won the election by promising jobs and prosperity. A new Terrence poll finds that by a 2-to-1 margin voters agree with Trump that a tax cut would be "good for the economy." Failure to pass a pro-growth tax cut puts nearly every Republican seat in peril. To keep the Republican majorities and grow the economy, Trump has to do one thing for voters: Show them the money.
US corporations are also banking at least 2-3 trillion dollars offshore precisely because of high taxes on those profits were they returned or repatriated to the US. Lower corporate rates would remove on returning these profits and thereby greatly boost tax receipts to the Treasury.
For the bottom bracket, the tax rate is raised from 10% to 12% and the standard deduction increase is mostly offset by the loss of the personal deduction. At this level mostly just rearranging chairs.
Middle income double standard deduction is irrelevant because they take away the personal exemption which is worth as much or more than the standard deduction.
Also, anyone who defines middle class as 40 to 100 thousand a year is being ridiculous. 150,000 is not rich. 200,000 is not upper class.
I hate it when people try to feed me a line of bullshit.
100% agreement.
I do agree with cutting corporate tax to make US more competitive. That will lead to more jobs, imho, and corporations really do pass on their costs in their product prices. Prices should decrease.
The only real revolution in personal taxes would be the end of income taxes and a total sales tax based system. Won’t happen in my lifetime.
Nothing says he can’t do this again and again. I think too, he should have started with 15%. Starting with 20% says he’ll probably end up with 25%.
Although true, this process is in its beginning and the hocus pocus aspect of playing around with moving parts has been and will continue to be scrutinized in the same manner as the process continues. The key point here is that the GOP has been unable to pass any significant legislation this year. In addition, next year are mid-term elections. Smoke and mirrors will be a risky proposition and could possibly cause tax reform to be debated but ultimately avoided until 2019. Also risky for GOP incumbents. They’ve made their beds.
TO STEPHEN MOORE: You sound like you would rather stand and watch someone fail than help prevent it. You write like a democrat liberal.
Considering we don't know what the tax rate brackets will be then there is no way the author can say this. All I know right now is that under this plan my taxable income goes up considerably. I know that the lowest bracket goes up two percentage points. Whether I pay more or less in taxes, and how much, depends on when the 25% rate kicks in. Until that is known then this $1500 to $2500 in savings claim is complete BS.
Or not. There's no reason to believe corporations won't keep that extra profit and use it for stock buy backs, mergers, or executive bonuses.
We and our adult children use the same CPA for our taxes.
Last year, he told all of us when we came into sign the forms and have him use the internet to file our taxes. When, if Trump’s plan became law, only one of us might need him for the preparation.
One of us could just use the internet and file without any paperwork as as a renter and the standard deductions would
work.
My wife and I would only have too save our interest payments on our mortgage and charity donations, and we could probably file electronically. That would eliminate at least a half inch of deduction data paper each year.
One family might want to continue to use the cpa, however his wife with her own business and a Business degree could probably handle their forms as per the CPA.
He sees a higher demand from his corporate accounts and small business accts. for his services.
He predicted that once California residents lose their sales tax and property tax deductions, there will be a lot of hostility towards any tax increases at every level in California.
On that point, he used my wife and my taxes on our home. Thank God for prop 13, our basic property taxes are basically the same after prop 13 became law.
However, our do good fellow citizens have voted in all types of Bonds for the Children, local college and sewer bonds. Those totals basically now equal our basic property tax.
He pointed out that the last bond bills for “the children”, the local college and general bs were defeated because some people woke up and looked at their property tax bills. When the Trump plan comes in that bs will stop and die a quick death across the country not just California.
Counties with higher sales taxes will lose $’s as people will order products from other counties.
He is a vet, and he told me, when they allowed vets to use the exchanges on line, to apply. Not only will we get free delivery, there will be zero Sales Taxes on any item from low cost to a high ticket item. (I have been approved and am a beta tester for the program which becomes effective for all those approved on Veterans day!). I have a few Christmas Items on my want list.
Not only will we save his fee, my bookkeeping/tax deductions paper collection will disappear, and our tax prep cost will be zero.
Morons dont understand that PEOPLE pay the corporate tax.
It is added to the accounting item officially called “cost of goods sold”
For those without an accounting background, “cost of goods sold” is EVERY COST you incur in order to produce something, including taxes.
The Democrat strategy is to get as many people as possible on government assistance and then use the boogey man of fiscal conservatism to get the masses to vote their financial self-interest.
The conservative strategy is to allow the middle class to keep more of its wealth (while those who earn less continue to pay no income tax at all), and then welcome the masses of poor, government-dependent folks to move up to the middle class. Then the masses of middle-class workers can vote their self-interest.
Unfortunately, there are not enough conservatives in office, and the non-conservative Republicans, just like their Democrat counterparts, vote their self-interest in order to turn being a public servant into a lucrative career.
We need more like Trump who earn their riches from building profitable businesses and then choose public service as a way of giving rather than getting.
Until a competitor wants an edge
Exactly
I have been reading most of the articles carefully. I have not seen a word about capital gains tax rates. Traditionally, they are much lower than income tax rate to encourage investment.
Anyone know or can point me to where I might find out what the plans are in regards to capital gains taxes relative to income taxes?
Not on topic but this seems to be the only thread talking about financial issues. What’s up with the Market? All kinds of chaos in the news and the Dow is still breaking records? Is Wall Street on another drunken binge or is the Trump Market real and sustainable?
Competition will be doing the same thing.
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