With the
election of Donald Trump over and the impending approval of new cabinet
members, it's interesting to note that, particularly within the realm of economic
policy, there exists significant uncertainty moving forward. Specifically, the
economic team that Trump is assembling would consist of both free-trade
advocates like Steve Mnuchin (Secretary of the Treasury) and Gary Cohen (head
of the National Economic Council and would-be Chief Economic Advisor), but also
economic nationalists such as Peter Navarro (head of the National Trade
Council) and Wilbur Ross (Secretary of Commerce.) As a former member of Goldman
Sachs, Mnuchin will be tasked with Trump’s tax plan which is anticipated to
reduce the current seven tax brackets to three, repeal the head-of-household
tax filing category, reduce the corporate tax rate from 35% to 15%, and
eliminate the federal estate tax. At the same time, Navarro and Ross will
likely be pushing for protectionist trade measures such as tariffs on goods
imported from countries like China.
In
theory, this policy division could mean an administration in which tax cuts for
higher-income individuals (an estimate from the nonpartisan Tax Policy Center
indicates that the top 1 percent would get about half of the benefits of the
proposed tax cuts with a millionaire receiving an average tax cut of $317,000)
are combined with protectionist trade policies that pass on higher prices to
everyday consumers. Though a reduced corporate tax rate could lead to
significant economic growth as some companies move their operations back to the
U.S. and others use their newfound tax benefits to foster research/development
as well as hire new workers, it’s also possible they would simply hold onto
their earnings rewarding excess profits to their shareholders. Moving forward
what do you think the economic policy balance will be between free-trade and
protectionism in the coming years? Will Trump’s economic policies help the “forgotten
men and women of this country” as he was fond of saying on the campaign trail?
http://www.npr.org/2016/11/13/501739277/who-benefits-from-donald-trumps-tax-plan
http://www.npr.org/2016/11/13/501739277/who-benefits-from-donald-trumps-tax-plan
3 comments:
I hope Obama has influence over Trump's policy. I am glad he is being outspoken about this, I think we have a lot to lose morally and economically by Trump's policies. It will be interesting to see how many Trump supports react when many of the policies that Trump has promised do not materialize. I hope I am wrong about that, but so far it seems to be true. I wonder how these tax polices favoring the wealthy will impact the economy. Like you mentioned, many of the wealthy that reap the benefits may not actually stimulating the economy with their extra earnings. But lower income individuals with extra earnings are likely to spend all the extra income they inquire because of basic needs they need met.
I think Trumponomics won’t work. It is too divisive; it will be applied politically, targeting favorites and enemies, rather than aiming at efficiency and stability; it may destroy rather than create jobs on net; and most of all it badly damages the U.S.’s global reach by cooperating less on issues of trade and migration. I think of the program as a whole as cashing in on the capital asset of America’s foreign reputation and redistributing some of those rents to Trump-supporting regions. That is a form of shortsightedness, and a sign of the decay of our republic.
That will be terrible if Trump's new tax policy will be as terrible as the news described. The news said after the new tax policy a middle-class family can only get a little bit tax cut but the top 1 percent would benefit more from the tax cut policy. If that's true, it will be really bad. However, I feel most people, especially for the middle classes, can not figure out how much the richest benefit from the policy accurately. People care more about how much I can benefit from the tax cut. Also, as the news said, theoretically, Trump's proposal to reduce the coperate tax rate will boost the economic growth, which can help the low-income bracked people get employed and get more income. How much money people will have in their pocket after taxes is really an important influential factor.
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