This article looks at how the proposed tax plan which aims to reduce the taxes paid by businesses (any size) to 15% and individual taxes brackets to 10%, 25%, and 35% has led to a lot of discussion about who this tax cut benefits and whether it will be effective in actually stimulating the economy a la Reagan's "trickle down economics." The tax reform also cuts down estate taxes and alternate minimum taxes. He is also allowing firms to not pay taxes on their foreign earnings.
Though it can be argued that the lower taxes on businesses will provide incentives for more entrepreneurial start-ups and make the United States attractive for foreign investment, it also means that people can now declare themselves business owners to evade higher taxes.
While clearly, the tax reform will benefit the wealthy more than the average voter, this Economist article looks at the other shortcomings of this tax reforms. An interesting thing the article points out is that despite Donald Trump bragging about closing loopholes, this new tax reforms creates a bunch of new loopholes of its own.
There is also the issue of trickle down economics, which rarely ever functions the way that conservative idealists hope for it to do. While Donald Trump is certain that this tax reform will pay for itself, the large tax cuts on corporations will certainly not help the budget deficit. With government revenue going down, it does beg to question how Donald Trump intends to fund his lavish wall and increased spending on defense.
1 comment:
This new tax cut puts more money in people's and corporation's pockets. I believe the Trump Administration wants individuals to spend more now that they will have more income and they would want corporations to create more jobs now that their taxes are lowered. However people are greedy and I don't see too many people or firms doing that.
Post a Comment