After the failure of his Healthcare plan, President Trump moves on the next thing that he promised during the election: Tax Reform. According to The New York Post, The Trump administration on Wednesday released a plan that was only one page long and did not include much detail of how taxpayers will be affected. They claim this plan will help boost the economy and give taxpayers the biggest tax cut in the history.
The new reform plan is said to cut taxes and simplify the tax code by reducing seven tax brackets to only three brackets: a 10 percent bracket, a 25 percent bracket, and a 35 percent bracket. However, the plan did not show where the brackets begin and end. How much money does a person need to make to fall into the 35 percent bracket?The new reform plan has things that clearly will help wealthy people. First, the repeal of alternative minimum tax (AMT), which cost Mr. Trump an additional 31 million dollars in federal income tax in 2005. Second, under the Trump plan, the administration wants to repeal the inheritance tax. This provision clearly would help wealthy people because they could pass on their property to their children without the “death tax”. The new plan will lower the capital gains tax. This means people who sell property or stock held more than a year will get a lower tax rate on the money they make from the sale. Most of the time, only wealthy people will have a lot of property or stock to hold on and sell. All of the above provisions are more likely to benefit wealthy people.
Moreover, the plan would also eliminate the federal income tax deduction allowed for state and local taxes. This provision would hurt the people who live in high-income tax states such as New York. In addition, the standard deduction is going to be doubled, so that a married couple won’t pay any taxes on the first $24,000 of income they earn.
The US corporate tax rate is among the highest in the world at 35 percent; it would shrink to a competitive 15 percent, meaning businesses could repatriate their corporate headquarters, and of course, jobs from countries like Mexico or Ireland or China would come back to the US. The opponents of the plan state that this massive cut could add more money to the $20 trillion debt the country already has. John Crudele states in one of his articles that “President Trump’s proposed tax reform could be great in the short term for the stock market, useless in helping the US economy and a disaster for future generations of Americans”.
The fact that President Trump has not released his tax return has made people hesitate to support his reform plan. They are wondering whether the plan really benefits the people like the new plan proposed. “I think a reasonable first step is for the president to do what every other president since Ford has done and disclose his tax forms for review by the American people so we can determine what conflicts of interest may potentially exist, how his proposed plan may benefit him as opposed to benefiting the people of the United States of America,” Rep. Hakeem Jeffries told CNN.
