Monday, May 1, 2017
Under the Trump Tax Plan, We Might All Want to Become Corporations
The Trump administration has finally outlined its new tax proposal, which leans heavily on tax cuts. President Trump wants to slash individual tax rates -- cutting the top rate from 39.6% to 35% -- and reduce the number of tax brackets from seven to three for individuals, which would be set at 10%, 25% and 35%. Today's rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. He also wants to cut the top tax rate for all businesses to 15%, far below the current top rates of 35% for corporations today.
The plan would give millions of Americans the opportunity to cut their taxes by essentially turning themselves into small business entities. Therefore, if the Trump administration’s tax plan were to become law, in the future a whole lot of people may just become corporations. Also, The rate would dramatically reduce corporate flight to low-tax countries.
However, as we learned in class, tax is the most important part of the revenue for a nation. If the tax plan were to pass, the will be a great shortage of national income. President Trump then will need to figure out whether to find a way to cover the gap or cut the spending.
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2 comments:
I agree with you that tax is the most important part of the revenue for a nation. Since Trump has always been a businessman he thinks that this policy might benefit the economy where as it could end up doing the opposite.
It will be interesting to see what corporations do with their extra cash after these tax cuts. While the intention is that the businesses invest more to grow themselves and the economy, only time will tell what actually happens.
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