Dear SWEET Scholars,
Along with Thai food, we will be discussing Trump's Tax Reforms tomorrow from 4:30 p.m. to 6:00 p.m. in the Kayak Conference Room. I'm looking forward to seeing all of you sweet people!
1) Who benefits from Trump's tax plan?
2) Do you think the U.S. can afford tax cuts?
3) Will tax cuts pay for themselves through higher growth?
4) Is the top federal corporate tax rate too high?
5) Do you think the tax cuts will pass?
Trump's Tax Reform Dissected
Along with Thai food, we will be discussing Trump's Tax Reforms tomorrow from 4:30 p.m. to 6:00 p.m. in the Kayak Conference Room. I'm looking forward to seeing all of you sweet people!
1) Who benefits from Trump's tax plan?
2) Do you think the U.S. can afford tax cuts?
3) Will tax cuts pay for themselves through higher growth?
4) Is the top federal corporate tax rate too high?
5) Do you think the tax cuts will pass?
Trump's Tax Reform Dissected
1. Clearly the rich and corporations benefit from the tax plan, and these benefits increase over the next decade. The Tax Policy Center predicts (as of early October) that about 75 percent of the savings of Trump's plan would go to the top 20 percent of earners, with more than half the savings going to the top 1 percent. After 10 years, nearly 80 percent of the tax savings would be going to the top 1 percent of earners. More concerning is the fact that those in lower tax brackets would see a tax rate increase of about 2 percent. Senator Rand Paul, pointed out that "possibly 30% of the middle class gets a tax hike."
ReplyDeleteFor corporations, they would see a corporate tax rate drop from 35 percent to 20 percent. This, along with other legislation, would save them about 2 trillion dollars over the next ten years. Where would these savings go? The Congressional Budget Office and Joint Committee on Taxation forecasts that about three-quarters of the savings would go to shareholders.
The problem with this tax plan is that the advantages for the rich and corporations are clear and quantifiable. People out of the top bracket are being sold the idea that the tax cuts will trickle down in the form of a better job market. I, for one, do not believe in the horse-and-sparrow theory of economics.
2. We cannot afford tax cuts. The graph in the reading shows that we already are on an upward trajectory when we consider debt. Trump's plan would exacerbate the problem by reducing federal income. Why cut taxes, especially when we have the very real problem of rebuilding/maintaining our country's infrastructure? Why not work to reduce waste and invest back into the infrastructure that allows our economy to function?
3. I don't think the tax cuts will pay for themselves through higher growth. I have no doubt that some growth will be seen, but companies and individuals who are let off the hook aren't going to suddenly feel the need to help fund services to the public, funnel their windfall towards new domestic business ventures, or pay their employees better wages.
4. I am not sure how we can argue that the federal corporate rate is too high when hardly any company pays at that rate. U.S. companies are shifting profits offshore, some companies qualify for accelerated depreciation, some save by giving top executives the option to buy stocks in the future at a discount thereby allowing them to deduct these payouts as a loss, and the federal government subsidizes many industries. The Walt Disney Company saved 1.48 billion over eight years due to tax breaks for movie making, and NextEra Energy, a Fortune 200 energy company, paid a 1.3 percent annual tax rate between 2005-2008 on more than 7 billion in earnings due to taking advantage of government incentives.
Now, I am not suggesting that businesses shouldn't use the tools that are presented to them. They absolutely should. However, it's hard to argue that they are paying too much money in taxes when they have so many opportunities not to pay the full rate, they utilize these opportunities, and are in a position to influence legislation, thereby creating more opportunities to save, in a manner well above the means of 99.9999999 percent of the citizens of this country.
5. I do not want the tax cuts to pass in their current form. For instance, I see absolutely no reason to repeal estate taxes. Who among us is actually reasonably concerned about estate taxes when there was a 5.45 million dollar federal estate tax exemption (as of 2016). Is this something the middle-class is honestly concerned about? Of course, no, it's not. Getting a 5.45+ million dollar inheritance is not the province of the middle-class. We really need to examine how the conversation was steered in that direction when few citizens have the "problem" of getting an inheritance of this size. Why aren't we instead talking about the consequences of slashing taxes (again) for the richest members of our society and increasing it for the least well-off?
1) The rich and wealthier parts of our country benefit from Trump's tax plan, unsurprisingly.
ReplyDelete2) After being exposed to my Income Tax class, I really don't believe that the US would be able to afford these tax cuts. Frankly, the US hasn't been able to afford a lot of what it does, anyway. We have been suffering deficits and taking more than we can chew and it has been impacting multiple facets of our lives. Everyone (almost) is impacted by the poor fiscal decisions of our country.
3) I do not believe that tax cuts will pay for themselves through higher growth, however, I cannot predict the future.
5) I do not think the tax cuts will pass, given their lack of security and the unlikeliness of succeeding. However, given that Trump somehow got elected to be the president of the United State of America, I can not really tell what is likely to and unlikely to happen anymore.
Look forward to seeing you all this evening!