Trump Tax Plan Seen as Boon for Rich, Question Mark for Others

Because they disproportionately own stock, high earners would also disproportionately benefit from Trump’s proposal to reduce the corporate income tax rate to 15%.

Donald Trump gave a major economic speech in Detroit, Michigan, on Monday.

What’s more, low-income filers don’t benefit very much from income tax deductions, because the value is tied to a filer’s top tax rate. He also proposed a hike in the standard deduction for families, as well as special deductions for childcare.

Former President Ronald Reagan’s tax reforms “unleashed years of continued economic growth and job creation”, Trump said to the Detroit Economic Club.

The backdrop to Trump’s speech, and to the presidential election in general, is a USA economy that is struggling to return to pre-recession rates of growth. Clinton is the anti-growth candidate.

A study released past year by a team of economists, led by Michael Cooper of the Treasury Department, found that pass-through entities now account for half of the business income in the United States, up from a quarter in 1980.

What that phrase means in conservative circles – and presumably what Trump plans to do – is reduce the number of tax breaks that make the tax code so complicated. And Clinton intends to follow in Obama’s footsteps, with a Bernie Sanders-like, left-wing policy mix. Acknowledging this history in no way discounts the contributions and love of women who cared for children in the past or of the many women who choose to work in child care or stay home to raise their children today. America’s been trapped in an economic hole for eight years. Doing it that way doesn’t make any sense, given that almost half of American households already have no federal income tax burden, either because they don’t have taxable income or they receive other tax breaks that zero-out their liability.

Expanding the earned income tax credit program for low-wage workers who are not raising children.

But his plan may not be getting the reaction he had hoped for, with several financial services executives and economists criticizing the proposal due to lack of specifics. Currently, corporations pay on average a bit more than 25% of their profits in taxes. “Because it’s a tax deduction, it’s going to redistribute income upwards”, says Blair. This is the entire basis of his claim that the rich will pay more under his plan.

This is basically a trivial thing, but it just goes to show how fanatic Republicans are about cutting taxes on the rich.

An independent taxpayer advocacy organization called the Tax Foundation predicts Renacci’s proposal would ultimately provide a slight rise in federal tax revenue. The top 1 percent as well as the financial industry and holding companies are some of the biggest beneficiaries of these tax savings. Those in the top bracket, however, are taxed at 39.5 percent and would receive a $395 deduction for the same $1,000 of expenses.

Meanwhile, the Affordable Care Act, which Trump promises to repeal, has given insurance to millions of people. This data is summarized by Mark J. Perry of the University of MI and AEI.

The Tax Policy Center estimated in December that an earlier version of Trump’s tax plan would lower federal tax revenues by $9.5 trillion over the next decade. But the total amount of tax paid is still higher – shareholders also pay taxes on dividends and capital gains generated by the companies.

These facts and figures slay a lot of left-wing urban legends – highly divisive urban legends, I might add. Clinton recently released a much-discussed campaign ad showing young children watching clips of Trump insulting, bullying, and mocking various groups, with the words “our children are watching”.

Renacci says many other countries have successfully implemented such a a “credit-invoice based consumption tax”, and his plan “will make the US the most competitive tax system in the world”.

“The alarming use of pass-through entities by big businesses, and the corresponding decline in corporate income tax revenue, is further evidence that our tax system is tilted heavily in favor of the wealthy and Wall Street”, said Brendan V. Duke, Associate Director of Economic Policy at CAP and coauthor of the report. Clinton, on the other hand, has nothing but prosperity killers up her sleeve.