The Trump/GOP tax plan will not spur job creation, economic growth nor raise stagnant wages for the lower and middle class. It’s built on a lie.
Once again, the GOP is trying to bamboozle Americans into believing that giving tax cuts to businesses and the ultra-wealthy will help everyone else. It’s never been true and is just a giveaway designed to keep money flowing into GOP campaign coffers and starve government.
Although details are scarce, there may be some movement toward creating a higher top bracket, although what incomes are impacted — and whether juicy write-offs will be pared — are not known.
Other than that dim bright spot, the rest of the plan is bad news for working people. The overall plan will help global and specialized businesses that don’t need help. And trillions that are sitting offshore will stay there and not create a single job in the Heartland.
Here are some of the known details, which are sketchy at best, according to The Washington Post:
— Cut the corporate tax rate from 35% to 20%. No word on whether the plan would limit corporate deductions or offshoring earnings.
— Collapse the current seven income tax brackets to three. Simplicity will not address the fact that the ultra-wealthy in more shelters than working people.
— Lower the top income tax rate from 39.6% to 35%. See above. What’s needed is more relief for people who receive the bulk of their income through wages. Those living off investments don’t pay Social Security, Medicare, unemployment and deductions for 401(k)s and health insurance.
— Eliminate the inheritance tax. Almost no one pays this tax. It would only benefit a handful of families.
— Eliminate the alternative minimum tax. That was the only provision ensuring that ultra-affluent taxpayers paid something in taxes.
— Create a 25% tax rate for “pass-through” companies. This would benefit entities like law firms, that give their profits directly to individuals. Another notable pass-through company is the Trump Organization.
— Double the standard deduction. This wouldn’t be a bad idea, although the cumulative effect could be small. Working people need help offsetting payroll, property and sales taxes.
— Eliminate some unspecified deductions. Still a lot of unknowns, but it appears that GOP tax writers will keep the mortgage interest deduction and charitable giving deduction that are favored by the richest taxpayers.
Then there are the huge corporate tax cuts, which need to be viewed through a lens. Will corporations actually pay that rate? Keep in mind that few pay the 35% rate now because of generous write-offs, so their effective tax rate can often go to zero. They can also park billions offshore out of the reach of Uncle Sam.