Tax
Schedule needed
Donald
Trump will be attacked by Democrats for his Tax Plan. His plan has morphed over time but all
iterations have raised the number at the bottom to pay NO TAX and the top rate
goes from 39.6% to 25%.
His
current individual income tax rate plan is 0 for couples earning $50,000 or
less a year to, 10% from $50,001 to $100,000, 20% for $100,001 to $300,000 and
25% for over $300,001.
Cato
criticized the plan in: Trump Tax Plan
Would Increase Tax Eaters, By Chris Edwards September
28, 2015 4:20PM
Data from the Tax Policy Center show that 45 percent of U.S.
households (“tax units”) will pay no federal income tax in 2015. That figure
has risen in recent decades.
In raw
numbers, 94 million households will pay some income tax in 2015, while 78
million will pay none. As the TPC table shows, virtually all higher-income
households pay income tax, while the nonpayers are mainly in the bottom half.
Presidential
candidate Donald Trump says that he would take another 31 million off
the tax rolls, in addition to what he says are 42 million current nonpayers. As
you can see, the Trump and TPC data do not match regarding the current number
of nonpayers.
Let’s
go with the TPC data. Adding tens of millions more nonpayers would push the
total number over 100 million. There would be more “tax eaters” in America than
taxpayers, at least in terms of the federal income tax.
To be
fair, not all 100+ million nonpayers would be tax eaters. If someone paid no
income tax, but also received no subsidies from the federal government, she
could be called tax neutral. However, millions of moderate-income people
receive the earned income tax credit (EITC), which is “refundable.” Those folks
pay no income tax but get a check from the government when they file their tax
return. They are tax eaters.
So a
missing detail from the Trump proposal is his plan for the EITC. By zeroing out
income tax for 31 million additional tax filers, he would automatically be
boosting spending through the EITC. The refundable, or spending, part of the
EITC is already $60 billion a year. Would Trump push that spending even higher?
I like
many features of Trump’s overall tax plan. But taking more people off the tax
rolls is not a good way to keep the government limited. If something is “free,”
people will demand more of it. Under Trump, 31 million more households would
have an incentive to demand more spending from Washington.
Comments
Trump’s
tax brackets need to be displayed in a tax schedule table, or Democrats will
claim that they are tax cliffs. In a
schedule, a couple earning $51,000 a year would pay 10% of the extra $1000;
that’s $100. Democrats will claim that Trump wants to have them pay 10% of the
total $51,000, if the tax schedule isn’t used to describe Trump’s plan.
The
EIC is really a Welfare Bonus Payment for parents and a Scam Program for
illegal immigrants claiming all family members living in Mexico. This was a
really bad idea. It would have been
better to simply raise the dependent deduction and not tie this to wage income.
Having
all couples who make $25,000 to $50,000 pay 5% would make sense. That would be $1250 to $2500 less any
standard deductions and exemptions. If
we can take the fraud out of EIC and keep it, EIC would cancel out the income
tax due, but wouldn’t result in a large cash bonus like it does now. Poor working families with children have
become dependent on this bonus.
Other
Welfare thresholds like Food Stamps, rent subsidies and cash welfare should be
studied to make sure there are no disincentives to working. Families reassume responsibility for family
members. Having jobs for US citizens should be the exit threshold to lift
citizens back into the productive economy.
Minimum wage jobs need to go back to US high school and college
students. They are not getting the early job experience they need. Any further immigration of welfare recipients
or minimum wage workers is suicidal.
Trump’s
$50,000 plan must assume that inflation will eat up most of their dollar’s
value once wages start to increase. If
this is the case, Trump won’t want to add a 5% bracket.
Norb
Leahy, Dunwoody GA Tea Party Leader
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