Winners and
Losers in the Trump Tax Plan, by Neil Irwin, 4/28/17, NY Times
The tax plan the Trump
administration released Wednesday consists (so far) of a single page of bullet
points.
If this were a more rounded plan, we
could wait for the tax wonks at various think tanks to run it through their
models and tell with some precision how it would affect people at different
income levels and who would benefit from different deductions.
Lacking that level of detail, we can
know only in broad-brush strokes which Americans would win and which would
lose. In a homage to the Trump plan itself, here are those winners and losers
in bulleted form.
Winners
■ Businesses with high tax rates. The plan would cut the 35
percent corporate income tax to 15 percent. While few businesses pay the full
35 percent rate, those that pay something close to it are in line for a huge
tax cut.
■ High-income earners. The plan would reduce the top rate on
individual income tax — now 39.6 percent for income over around $470,000 for a
married couple — to 35 percent. But that’s only part of the gain for
high-income earners. It also would eliminate a 3.8 percent tax, used to help
fund Obamacare, that applies to investment income over $250,000 for a couple.
■ People with creative accountants. The 15 percent business tax
rate could open a huge loophole for people to receive business income through a
limited liability company or other pass-through entity instead of as wages.
Depending on how the law is drafted, that could enable some people to pay that
low 15 percent rate on their earnings instead of an individual income rate up
to 35 percent. People who already receive their income through investment
vehicles wouldn’t have to change anything for a windfall.
■ Multimillionaires who want to pass money to their heirs tax-free. The
plan would eliminate the estate tax,
which currently applies to individuals with estates of $5.5 million or couples
with estates worth $11 million.
■ People who still fill out their tax returns by hand. Administration
officials said the plan would simplify paying taxes, particularly emphasizing
plans to eliminate the alternative minimum tax. The A.M.T. can definitely be annoying, and costly, but if
you use an online tax preparation service, the software does most of the work.
■ Retailers and other companies that feared a “border adjustment tax.” The
Trump administration did not embrace House Republicans’ big strategy to pay for
the tax cut, which was strongly opposed by the retail industry and others that
thought they would be losers.
■ Donald J. Trump. It is striking how many of the categories listed above
affect the president and his family. He is a high-income earner. He receives
income from 564 business entities, according to his financial disclosure form,
and could take advantage of the low rate on “pass-through” companies. According
to his leaked 2005 tax return, he paid an extra $31 million because of the
alternative minimum tax that he seeks to eliminate. And his heirs could
eventually enjoy his enormous assets tax-free.
The new tax plan would eliminate the
federal deduction for state and local income tax. If you live in a place where
such taxes are high, like California and this San Francisco street, that’s
unwelcome news.CreditPeter DaSilva for The New York Times
Losers
■ Upper-middle-income people in blue states. The plan would
eliminate the federal tax deduction for state and local income tax. If you are
in a place where such taxes are high, like New York or California, you would
lose a valuable deduction.
■ Deficit hawks. The Trump plan doesn’t come with any
estimates of its impact on the federal deficit. But his campaign plan, to which
the new document is distinctly similar, was estimated by the analysts at the Tax Policy Center to reduce federal revenue by $6.2 trillion over a
decade. That implies either a very large increase in the national debt or
huge reductions in federal spending.
■ People who want Congress to pass something. While the Trump
plan solves some of the policy contradictions of his earlier promises with a
“candy for everyone” approach to cutting taxes that leaves it with even bigger
political contradictions. The plan’s tilt toward businesses and the affluent
means that Democratic support will be scarce to nonexistent. A law passed via
the Senate’s budget reconciliation process — preventing a filibuster by Democrats and allowing a narrow majority of
Republicans to prevail — is not permitted to increase the deficit beyond a
10-year window. That means the major provisions would probably have to be
temporary. Even if adjusted to be temporary, the presence of deficit hawks
among Republicans would make the Trump plan no slam dunk to pass.
Comments
The NY
Times is the “mother” of liberal media, so the assumptions and conjecture
should be disregarded for now. This is all about jobs. We don’t want the rich to move their offices
to other countries, because we need their jobs and their money here in the US.
The
removal of the Death Tax will allow family farms and family businesses to
survive the death of the grandpa who owns the farm or business. We need to double the number of family farms
and businesses.
The 15%
corporate tax should allow companies to keep the 20% they have been
overcharged. We need that so these
businesses can reinvest their revenue, become bigger and employ more people.
The
Private Sector has been decimated in the US and needs to be expanded, while the
size and footprint of government needs to shrink. The alternative is to become
good little communists who are, by definition, poor and enslaved.
Home
ownership is the bedrock of a free market economy and strong private sector.
Renters need to find a home and buy it.
We have
no choice but to restore the US economy first and cut all non-critical
government spending. The days of having
the US government play Santa Claus are over.
Norb
Leahy, Dunwoody GA Tea Party Leader
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