Thursday, April 27, 2017

 

Political Mayhem Thursday: The Trump Tax Plan

So, here are the seven key components of the Trump tax plan, according to the New York Times:

1) Move from 7 tax brackets to just 3
2) Double the standard deduction
3) Repeal the Alternative Minimum Tax
4) Lower the capital gains tax
5) Repeal the inheritance tax
6) Eliminate all tax deductions for individuals (except charitable contributions and mortgage interest)
7) Cut the corporate tax rate from 35% to 15%

So, here are my concerns:

-- All of these act to lower the amount of money the government collects. So... does that mean we are just going to borrow money and raise the deficit?

-- Numbers 3, 4 and 5 will significantly increase income disparity.

-- Over the past decade, much has been made that corporations "are people, too" in terms of things like free speech rights to make political donations. So, why shouldn't they be taxed like people?  I realize that our corporate tax rate is high relative to some countries, but so is our spending on things that benefit other countries, like a military that spans the world to keep peace.

What do you think?

Comments:
This is part of the long term radical conservative plan: cut taxes for the wealthy, including share holders in corporations which give big bonuses to executives so they can donate to the party, and slash spending on the services for the poor and needy, including children, the disabled, and the elderly. Even Social Security and Medicare are being targeted. It is exactly the opposite of what a supposedly Christian nation should do.
 
My concern--and this goes to your points about deficit and income inequality--is whether Trump's cuts will be matched by actual reform. In other words, I'm all for simplifying and reducing rates, but there must be a corresponding effort to close loopholes that largely benefit more affluent tax payers (individual and corporate). In this regard, many corporations already pay an effective tax rate well below Trumps proposed 15% because they utilize special loopholes and handouts.

As for those darn corporations, the common sense answer to your question about taxing them like people is that, well, they're not *real* people. They're legal persons--an important fiction that exists to promote the association of actual people for particular purposes--but they don't treat their money like flesh-bound mortals. Indeed, like their profits and losses, corporations tend to pass their taxes to actual humans. Since those blood-filled mortals already pay taxes, and because we should want to incentivize domestic corporate activity, it makes sense to lower corporate taxes (as above, based on the important assumption that the various loopholes that swallow tax revenue are closed).

But I have low expectations for quality reform. Trump--for all his bluster--does not seem to have the courage of his convictions. It's much easier to give people something (cut taxes) than it is to take it away (close loopholes, reform healthcare, etc).
 
So perhaps if they cut my taxes I will be able to afford my health care premium.
 
CTL-- True re corporate taxes. However, as dividends become less common, the argument that profits are taxed twice diminishes. Capital gains based on increased valuation often are not connected to a company's earnings.

And I also agree with you about low expectations.
 
https://www.washingtonpost.com/opinions/the-dumbest-part-of-trumps-dumb-tax-plan/2017/04/27/c621d2ac-2b7f-11e7-a616-d7c8a68c1a66_story.html?hpid=hp_no-name_opinion-card-c%3Ahomepage%2Fstory&utm_term=.66a9d3501251


 
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