Republican are trying to sell their historic tax reform plan to the American public ahead of a likely vote early this week at a time when they are attempting to get a major legislative victory in 2017 ahead of the 2018 mid-term elections in November that will likely re-shape the political mix in Congress during the final 2 years of President Trump’s presidential term.
President Trump told reporters yesterday before his departure to Camp David that the recently amended Republican tax reform bill, the Tax Cuts and Jobs Act, will help the middle class, create more U.S. jobs, and could raise GDP growth to the 4, 5, and 6 percent range, which is significantly above the latest 3.3 percent GDP reading in the 3rd quarter of 2017, according to the Department of Commerce on November 29th.
A November 30th “dynamic score” from the non-partisan the Joint Committee on Taxation of the Tax Cuts and Jobs Act which weighs the macro effects of the Republican tax reform plan shows U.S. GDP is estimated to grow 0.8 percent over 10 years while adding $ 1 trillion in deficit spending.
Another dynamic score of the Tax Cuts and Jobs Act, based on a December 2nd Senate version of the Republican bill from Penn Wharton Budget Model revealed that over the next 10 years, average annual U.S. GDP is expected to rise 0.50 to 1.0 percent higher while costing between $ 1.2 – 1.4 trillion.
Republicans supporting the Tax Cuts and Jobs Act prefer to overlook the dynamic scoring estimates from the Joint Committee on Taxation and Penn Wharton Budget Model and instead point to a more robust estimate from the Tax Foundation which shows the 10 yr. cost of the Tax Cuts and Jobs Act is just 0.5 trillion while it is projected to raise U.S. GDP by a much larger amount, 3.7 percent over 10 years.
However, the Committee for a Responsible Federal Budget noted that the Tax Foundation’s more robust estimate doesn’t account for the “economic cost of debt” and wrote that when the U.S. government issues new debt to cover those deficits, it must be purchased from increased foreign investment, higher domestic savings, or a shift in domestic savings away from private investments.
GOP Tax Reform Bill: Tax Cuts And Jobs Act
Under the latest amended version of the Tax Cuts and Jobs Act, the tax penalty from the individual mandate of Obamacare is eliminated, the standard deduction is roughly doubled for American individuals and married couples, the top tax bracket for wealthiest Americans drops from 39.6 to 37 percent, and the corporate tax rate is cut to 21 percent from 35 percent beginning January 1, 2018, representing the largest reduction of the corporate tax rate in the country’s history at a time when no U.S. recession is in view, corporate profits are soaring, and U.S. stock indexes are at historic highs.
The individual tax cuts have a sunset in 2025, meaning the tax cuts are phased out.
The carried interest loophole which impacts Wall Street remains intact under Tax Cuts and Jobs Act despite President Trump’s earlier talk during the campaign season about eliminating it.
According to a Public Policy Polling (PPP) poll released on December 14th, just 29 percent of Americans support the Republican tax bill compared to 49 percent who are opposed.
By a 23 point margin voters said they are less likely to vote for a member of Congress next year who supports it.
Forty-nine percent said support for the bill makes them less likely to vote for someone to just 26 percent who consider it a positive.
Only 26 percent of polled Americans think the middle class and small businesses will be the primary beneficiary of the bill with 61 percent thinking it will be the wealthy and large corporations.
Based on a December 10-12th Economist/You Gov poll, the U.S. Congress received a poor rating with a majority of polled Americans, 38 percent, strongly disapproving of the way Congress is handling its job compared to 23 percent who somewhat disapprove, and 15 percent who neither approve/disapprove, and 15 percent who were not sure.
The poll also revealed that a majority of Americans, 32 percent, believe the U.S. economy is getting better.
Treasury Secretary Steve Mnuchin said on CBS’s Face the Nation aired on Sunday that the Republican tax plan is going to have a “huge impact” on the U.S. economy and on U.S. jobs.
“You’re going to see that right away” Mnuchin said on Face the Nation.
Mnuchin predicted the average medium American family with 2 kids will see cuts from anywhere from $ 2,000 to 4,000.
The latest November non-farm payroll report from the Department of Labor revealed that employment growth has averaged 174,000 per month in 2017 under the Trump administration, compared with an average monthly gain of 187,000 in 2016 when former President Obama was in the Oval Office.
Some of the weakness with employment growth in 2017 was the result of the hurricanes that hit the U.S. Deep South in the late summer with sharp payroll declines from storm damage.
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Here is my latest You Tube video where I provide some additional video commentary about the GOP tax plan: