The Republicans unveiled their new Tax Plan and it has received mix reactions.
President Donald Trump and congressional Republicans are proposing a tax plan that they say will be simple and fair.
In a document obtained by The Associated Press on Wednesday, they outline a blueprint for almost doubling the standard deduction for married taxpayers filing jointly to $24,000, and $12,000 for individuals.
The plan calls for cutting the corporate tax rate from 35 percent to 20 percent. The GOP proposal also calls for reducing the number of tax brackets from seven to three with a surcharge on the wealthiest Americans.
The plan also leaves intact the deduction for mortgage interest and charitable deductions.
The White House and Republicans plan a formal roll out later Wednesday.
Trump’s plan has been attacked by the left that it is making the rich richer and by the right that it is attacking the rich. Trump had promised a corporate tax rate of no higher than 15%. This plan has a corporate tax rate of 20%.
This is ridiculous. Here is the breakdown in percentage of total federal taxes paid by income level in the United States as of 2011, according to the Congressional Budget Office:
Highest Quintile (above $234,700): $57,500
Fourth Quintile (above $83,800): $14,800
Third Quintile (above $49,800): $7,400
Second Quintile (above $29,600): $3,200
Lowest Quintile (above $15,500): $500
When you factor out the government transfers received, only the top two quintiles actually pay net federal taxes: $46,500 for the top quintile, $700 for the fourth quintile. As Mark Perry of American Enterprise Institute writes:
the richest 20% of Americans by income aren’t just paying a share of federal taxes that would be considered “fair” — it goes way beyond “fair” — they’re shouldering almost 100% of the entire federal tax burden of transfer payments and all other non-financed government spending.
But it’s apparently unpopular to talk about actual statistics when we’re busy demagoguing high income earners who have supposedly “rigged” the tax system to their benefit, despite paying a higher effective tax rate than any other quintile and despite shouldering the entire burden of federal spending.
That has not stopped Trump from praising it:
President Trump is out selling his tax reform plan and one key selling point for the administration is framing it as a “Middle Class Miracle.”
Between the lines: Trump is hoping to sell his plan as this generation’s version of the Reagan-era economic boom, largely created by his tax policies. Trump’s “Middle Class Miracle” speaks to his admin’s plan to raise the bottom tax rate and double the standard deduction — which means Trump can accurately argue that many more low income earners would pay no tax under his plan, as reported by Axios’ Jonathan Swan.
“There is no reason that Democrats and Republicans in Congress should not come together to deliver this giant win for the American people and begin the Middle Class Miracle once again,” Trump said during today’s tax speech.
All the details are not quite finalized yet but this Tax Plan seems to be the best that Trump can pull off right now. With this plan, he’ll be able to help the Middle Class and Small Bussiness owners through deductibles and Tax Cuts. Trump is relying on the votes of Democrats as Orrin Hatch pointed out in an interview
Wednesday on Fox Business Network’s “Mornings with Maria,” Senate Finance Committee chairman Orrin Hatch (R-UT) said it would be “almost impossible” to pass tax cuts without help from the Democrats.
When asked if tax reform would pass, Hatch said, “I think we can, but we will need to have some Democrat help. I think we got to put aside the differences and start working together.”
He added, “It’s tough to do. We’re so equally divided that it’s going to be almost impossible to do without some Democratic help and I’m hopeful that we can do that.