Trump Tax Plan

[KeithE]

[Sandy]

Lots of economic theory circulates around. It sounds reasonable to think that if you cut the taxes of the wealthiest individuals, and corporations, that the additional money will go into investments that will expand the businesses and create jobs and additional revenue. The motivation of the ownership would be, obviously, to make more money and expanding the business is what it takes to do that, which requires the additional revenue to invest in the expansion. That, in turn, creates jobs and adds additional revenue to the tax base. Except, every time its been tried, it has not only failed to produce the desired results, it has led to a deep and sustained economic recession. Why?

For one reason, the ability to expand the business is cut off at the bottom because the consumers who would be spending money to expand it don't have it to spend. They're paying for the infrastructure to support the expansion, and providing other free, tax supported services for the corporately wealthy. For another, business expansion requires market share expansion, and most businesses with new cash to invest will take it somewhere to get a return on investment much faster than here. It does create jobs, in another country. The wealth that is returned goes into the bank account of the corporate wealth here, not into the economy. Corporate investors are inclined to put their money where it benefits them the most, they're not interested in providing jobs or helping people.

[KeithE]

[Haruo]

Automation is the killer. Over the next 20 years we need to cut back from an eight hour standard day to at most four, with no loss of weekly income. Good luck getting capitalism to do that without government pressure and added regulations. But the bureaucrats need to cut back to four-hour days, too, and eventually to two. Or maybe a two-day, ten-hour-shift standard will work best...

[KeithE]

[KeithE]

The Trump Income Tax Plan has only three tax rates (20%, 25% and 35%) - no details of where the tax breakpoints are. The Alternative Minimum Tax, the Estate Taxes, and the ObamaCare surcharge (3.8%) are eliminate - all 3 apply to the rich (e.g incomes over for the AMT and estates over and incomes over fro the ObamaCare surcharge). Below is the summary of Trump Tax Plan released to the public:



Outside of this page, there is also an increased tax deduction of $12,00 for singles and 24% for married-joint filers. So in effect there is a no tax on those couples making less than $24,000 a year. That is an unlivable income - they will need it. And Trump is mentioning that in selling this plan in saying he is cutting taxes on all people. That is not true. Let me explain.

Below is a useful diagram that shows what would have happened under the Trump Tax Plan that he proposed during the campaign which also had only 3 tax rates (12%, 25%, 33%).



If the tax rate break points (married-joint filers) are the same as before ($75K and $225K), we see that the majority of working Americans (annual income more than $24K but less than $75K) will see a tax rate increase from 15% to 20%. This points out the lie that his tax plans cuts taxes on everyone.

And the richest (annual incomes over $415,050) will see a tax rate drop from 39.6% down to 35%. The Trump plan also offers the ability to for high income earners to declared themselves corporations and their income be said to be long-term capital gains and be taxed at 15% (instead of 35%). Most will make that move.

I don’t think this tax plan will stand even through the House. But it is working in the wrong direction. Do not be duped. A much better deal for ordinary Americans is needed.

Also the Trump Budget is cruel (ending most social programs (more on this later), scaling back cancer and other health research), irrational (assuming a ) and has a major .