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Wednesday, April 26, 2017

Trump Goes ‘MASSIVE’ On Tax Cuts In New REFORM Plan

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Trump administration officials outlined a sweeping tax reform plan Wednesday that calls for “massive” cuts for businesses and other changes that could yield big savings for American families. 
The plan swiftly drew congressional criticism about the potential impact on the deficit. But administration officials voiced optimism that the proposal would spur economic growth, and said they'd reduce tax breaks elsewhere. 
“We have a once-in-a-generation opportunity to do something really big,”  top White House economic adviser Gary Cohn said. “Tax reform is long overdue.”
As the administration nears the end of its first 100 days, Cohn and Treasury Secretary Steve Mnuchin provided the contours of the administration’s long-awaited tax plan in a White House briefing with reporters.
The plan would, perhaps most significantly, slash the corporate tax rate from 35 percent to 15 percent. Small business owners could also benefit from that rate. 
“The president is determined to unleash economic growth for businesses,” Mnuchin said. 
The plan also would collapse the income tax system from seven to three brackets: 10 percent, 25 percent and 35 percent. The current top rate is 39.6 percent.
The administration is looking as well to double the standard deduction, or the amount of income individuals and families can report to the IRS tax-free.
The current standard deduction would rise from $6,300 to $12,600 for individuals under the proposal. For married couples filing jointly, it would rise from $12,600 to roughly $24,000.
Earlier in the day, Mnuchin called it the “biggest tax cut and the largest tax reform in the history of our country.”
The plan will immediately face questions on Capitol Hill over the impact on the federal budget and deficit, considering the tax cuts would presumably represent billions in lost revenue every year.  
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., issued a statement calling it an "unprincipled tax plan that will result in cuts for the one percent, conflicts for the President, crippling debt for America and crumbs for the working people."
But officials said Wednesday they plan to eliminate most tax breaks that benefit high-income taxpayers. At the same time, they said popular tax breaks like the mortgage interest and charitable deductions would be preserved. 
With administration officials saying they want to get to work with Congress as soon as possible, a statement from Senate Majority Leader Mitch McConnell, R-Ky., House Speaker Paul Ryan, R-Wis., and other top GOP lawmakers said:
“The principles outlined by the Trump Administration today will serve as critical guideposts for Congress and the Administration as we work together to overhaul the American tax system and ensure middle-class families and job creators are better positioned for the 21st century economy." 
The plan would also eliminate the estate tax that Republicans often deride as the 'death tax' and the 3.8 percent tax on investment income under ObamaCare. 
Officials said an underlying goal is to simplify the tax system, noting that the increase in the standard deduction would mean far fewer households would have to itemize their deductions.
Mnuchin also called for a one-time tax on corporate money overseas, predicting it would bring trillions of dollars back to the U.S. 

1 comment:

  1. In my opinion the most important aspect is that reducing revenues needs to be accompanied with a reduction in spending lest we incur spending deficits. In some ways lower income tax rates can result in higher tax revenues but history has not supported the claims that all tax reductions result in higher economic activity. I believe a reduction in the corporate income tax rate will see a positive result in revenues but I am not convinced that further reductions in the personal income tax rates will have the same affect on federal income tax revenues.
    Our tax rate on corporations is too high. We don't need to be zero or even the lowest but much lower is advisable to not only prevent more companies from moving taxable operations out side of our borders but possibly to attract a few companies to bring taxable operation here. We offer the safety of our laws and the proximity to the market. Up until recently the federal revenues collected as a result of corporate income tax amounted to about 17% of the total federal income tax collected. Lowering that rate could realize an increase in tax revenues from corporations.
    I have long felt that the tax rates for individuals are adequate IF we eliminate most of the deductions. Expenses for child care and dependents should be left in place and a deduction for tuition paid to secondary education institutions.
    In my opinion an important aspect of the overall tax structure is money taken out of a business whether it is a sole proprietorship, a corporation or even a not-for-profit should be taxed no matter what form it was paid. Salaries, wages, dividends, bonuses, stock options and even capital withdrawals should be taxed as personal income to the person receiving those dollars. And taxed at the rate of wages tips and salaries for a person in whatever tax bracket they are in. If we did this properly we might even be able to completely eliminate the corporate income tax. Let the company earn as much income as possible. But the moment the owners take a penny out of the company it is taxable.
    Investment income should be taxed at a lower rate because for the majority of investors the money that was invested was already taxed once. Only a few people are in the Warren Buffet bracket and we need simple, transparent tax laws. Not a complex system that requires financial wizards to understand.
    I would also like to eliminate income tax withholding from employees pay. We could nearly eliminate the IRS if tax was collected at the end of every pay period and reconciled right then. The deduction for child care expenses could be handled at the time the payroll is calculated or a rebate system established and only paid for weeks the child was actually there.
    I’ve even pondered the idea of making child daycare a function of the public sChOOL system so lower income workers don’t have the financial burden individually. Let’s put that into the collective community domain and make it available to everyone. sChOOLs should be treated as a safe house for children. We can establish a system to hold parents responsible for coming to get their children when they are supposed to. And we can keep kids from wandering the streets unsupervised even if the parents are not working.