This article talks about the two ways that Trump and his family could benefit from his tax plan. The first way is decreasing the business tax rate on pass-through entities from 39.6% to 15 %. A pass-through entity is a special business structure that is used to reduce the impact of double taxation. Pass-through entities don't pay income taxes at the corporate level. Instead, corporate income is allocated among the owners, and income taxes are only levied at the individual owners' level. The pass-through entities happen to include almost every entity in the Trump family's financial portfolio. There is no doubt that Trump's tax plan would save him and his family a huge chunk of money. Then the article went to talk about how it is reasonable to assume that the tax that Trump pays at the top rate on his business income would fall by a lot. For every $1 million in taxable income, he would pay $150,000 under his new tax plan instead of $396,000. However, depending on what tax breaks the administration would support, any savings that Trump might have under his own plans could be undercut.
The second tax break that would benefit the Trump's family a lot is a repeal of the federal estate tax. Right now, only the portion of an estate over $5.49 million is subject to the estate tax, at a top rate of 40%. Trump's net worth is likely way more than $5.49 million, the repeal of the estate means the Trump's family gets to enjoy a lot of tax-free money unless Trump decides to give all his wealth to charity.
Link to article: http://money.cnn.com/2017/04/28/news/economy/trump-tax-plan-trump-benefit/index.html
3 comments:
This is a prime example of political institutions working out of self interest. Its just fascinating to me that a lot of people voted for Trump because they despised the establishment as it had stopped working for the common man. So far Trump has not done one thing that hints towards addressing their concerns. We've only seen how his policies are helping the elite which includes his own family and those closest to him. It will be interesting to see how his supporters react in the coming months of his presidency.
This challenges the idea we hear so often in economics, that efficiency is achieved when everyone acts in their own self-interest. I wonder if power and distribution of power challenges that idea. It is natural to want to pay less taxes, but I would hope the President of the United States would rise above self-interest. I am interested to see Trump's next moves and whether he will be held accountable.
I agree with Emily and Khadija that it seems self-interest is put ahead of national benefits and political institutions are affect by self-interest. It's a nature for people to chase their own benefit because it's an incentive that pushes economy to reach efficiency. However, I do not think it's proper for a president to do so. On the other hand, I'm not clear how this tax policy will benefit others and it seems that the author focused only on Trump family. I think it is hard to judge the tax policy and I'm looking forward to seeing the following policy and how those will meet Trump's supporters requirement.
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