Trump’s Incentive-Packed Tax Plan

 

Tax reformMuch as he did in his command performance before the United Nations, when he took back control of U.S. foreign policy, President Donald Trump has seized and energized the tax cut issue. Almost daily, he is pounding away on the themes of faster economic growth and more take-home pay, arguing that his plan will make America’s economy great again.

“Under my administration,” Trump just told the National Association of Manufacturers, “the era of economic surrender is over.”

The Trump plan would slash large- and small-business tax rates, double the standard deduction for middle-income folks, make the whole tax code simpler by eliminating unnecessary deductions, repeal the death tax and end the alternative minimum tax.

As usual, Democrats say the president’s plan is a handout to the rich. But in a recent speech in Indianapolis, Trump asked: Why can’t this be a bipartisan tax cut bill?

The argument that the U.S. is doomed to 2 percent or less growth — “secular stagnation” no matter what we do in terms of tax policy — is nonsense. Across-the-board tax cuts produced 5 percent annual growth during the JFK period. And after tax cuts were fully implemented in 1983, real growth averaged 4.6 percent for the remainder of Reagan’s presidency.

OK, let’s take one example from the Trump tax plan. Corporations today are taxed at 35 percent. That means, for every extra dollar of profit, a company keeps 65 cents. But the president has agreed on a 20 percent corporate tax rate. So, for the extra dollar earned, the private company would keep 80 cents.

On the individual side, the sleeper tax detail is the doubling of the standard deduction. This is a huge positive for young millennials (who don’t own much) and folks with no mortgages or homes. It puts more cash in worker’s pockets, simplifies the code and means that near 80 percent of taxpayers won’t have any deductions.

Slimming income-tax rates from seven to three brackets and cutting income-tax rates in general add even more supply-side incentives to the Trump package.

More money for rich people? Well, the not-rich family of four will be a lot better off with a $24,000 standard deduction. And the center-right Tax Foundation calculates that the bottom 80 percent of households get a lower tax burden, while the top 20 percent get a higher burden.

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Comments

  1. How about NO taxes on individuals who stuck their neck out and organized a business that employs many Americans and their families along with all who benefit from the wages of those employed? Or just do it the Commie/Dem way and make everything State owned?

  2. retiredxlr8r says

    Won’t make much difference in California. With the additional law enforcement costs due to the sanctuary state created problems. Brown can’t do anything of significance without Federal help, yet he keeps throwing crap at Trump.
    Trump’s tax cuts and changes will allow the Citizens of California to be able to afford to move to another state so they can follow the jobs.
    California will no longer be able to share in the success of the economy because they have opted out of the United States of America!
    Their latest laws have violated the Constitution, being a sanctuary state is effectively seceding. And their ammo registration is nothing but a back door gun registration; buy a .45 cal bullet, leave your thumb print, name and address and guess what? California Communist have a registration of guns, they just don’t have the serial number, but they do know who you are, what you own and where you live. I.e., a violation of our 2nd Amendment rights.
    The Gov wants to de Dictator in Chief!

  3. JohnnyMordoc says

    I am all for tax cuts – cut the capital gains and estate taxes also – we already paid taxes on that money. The only thing I am fearful of is the elimination of the deduction for State and Local taxes…..
    California has some of the highest!

  4. Any tax plan that cuts out the deductions for State and local taxes and personal property taxes means a tax increase for middle class folks. I understand the political pressure to get rid of the mortgage interest deduction because most people now in the US probably cannot afford to own a home, so it’s seen as a rich-people perq. But why shouldn’t people in California have a deduction for the 10% of their income they lose to the Franchise Tax Board? I like tax simplification but on the order of let’s have everybody just pay 10 or 15% Federal tax. The burden of tax in California is huge — we will mostly suffer with Trump’s plan because he can only avoid a huge deficit increase by stiffing the middle class to give benefits to businesses large and small. No amount of taxing the rich brings in needed revenue — you have to tax the middle income earners.

  5. Raising taxes for 30% of the middle class and penalizes high cost states is not something that will get Trump reelected that’s for sure. He is not delivering on his promises.

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