President Trump gave a speech yesterday from Indiana where he introduced new tax reform about what he said is the largest tax cut in the nation’s history aimed at delivering historic tax relief to Americans.
“I’ve been waiting for this for a long time. We’re going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans, and we are going to bring back the jobs and wealth that have left our country…. and most people thought left our country for good” President Trump said.
Trump explained that taxable income for working Americans will be subject to just three tax rates of 12 percent, 25 percent, and 35 percent, down from seven existing tax brackets.
The standard deduction will be doubled so that more income is taxed at 0 percent, resulting in free tax for the first $12,000 of income for an individual and $24,000 for a married couple.
The corporate tax rate drops to 20 percent from 35 percent while there would be a repeal of the Alternative Minimum Tax, and the estate tax.
Although President Trump claimed that the framework under his tax proposal includes their explicit commitment that tax reform will “protect low-income and middle-income households, not the wealthy and well-connected” Sen. Bernie Sanders said in a video released yesterday that the Trump tax cuts are designed to benefit the very wealthiest people in this country at the expense of virtually everybody else while they also add to the national debt by trillions of dollars.
Sen. Sanders called Trump’s tax plan a “disaster” and cited how it repeals the estate tax which he pointed out only applies to the top two tenths of one percent of the very wealthiest Americans.
Trump's tax plan is an absolute disaster. Here's why: pic.twitter.com/uda4X5G960
— Bernie Sanders (@SenSanders) September 27, 2017
President Trump explained that under his tax plan they are eliminating most itemized deductions that primarily benefit the wealthiest taxpayers and are giving Congress the flexibility to add an additional top rate on the very highest income earners to provide even more tax relief for working people.
The Trump tax plan is revenue neutral which means it doesn’t contain any new revenues to offset the deep tax cuts that are expected to add to the U.S. national debt, currently at $20 trillion.
Tax Policy Center Research Shows Trump’s Tax Plan Favors The Wealthiest And Adds To Federal Deficit
According to the non-partisan Tax Policy Center which analyzed President Trump’s earlier April tax outline that carried an even lower corporate tax rate of 15 percent instead of September’s 20 percent and 3 individual tax brackets of 10 percent, 25 percent, and 35 percent instead of September’s 12 percent, 25 percent, and 35 percent, their analysis showed that without any revenue raisers, a Trump-like tax plan would reduce federal revenues by $7.8 trillion over the next 10 years and by $13.1 trillion over the following decade.
The lowest income group, 20 percent of households making $25,000 or less would see their average after-tax income increase by $130 or roughly 1 percent.
Middle-income households, earning between about $50,000 and $86,000, would see an average increase in after-tax income of about $1,900 slightly more than 3 percent.
American households in the top 1 percent, who earn more than $732,000 annually, would get an average tax cut of $270,000 or nearly 18 percent of after-tax income.
The Trump administration hopes that the tax cuts will create growth in the economy and pay for themselves by increasing tax receipts but they aren’t likely to fill in the $ 7.8 trillion hole due to lost federal revenues, using the Tax Policy’s research from the April tax model.
Concerning the repatriation of the $2.8 trillion in company earnings offshore, under President Trump’s tax plan those parked dollars will be subject to a one-time “low tax rate”, which could help end the tax incentive to keep them offshore.
President Trump said in his speech yesterday from Indiana, “tax reform has not historically been a partisan issue, and it does not have to be a partisan issue today.”
However, his tax proposal adds trillions to the federal deficit to likely scare off the deficit hawks in the Republican Party while it also lacks the tax revenues needed to placate most Democrats, not to mention they are tilted towards giving the largest tax breaks to the wealthiest American households and corporations which remains a non-starter for Democrats.
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