As promised, President Trump released his proposed tax reform. Moreover, as expected, it was met with scrutiny and animosity.
The dramatic overhaul of the United States tax code specifically calls for lower tax rates for corporations, tax cuts for individuals, and the elimination of tax brackets.
One-Page Outline Sparks Outrage
The proposed tax reform consists of a one-page outline, for now.
So far, the key details of how this plan will work have not been released – some say not even planned. However, this is the White House’s initial offer to Congress, and Trump’s way to boost economic growth.
Corporate taxes are expected to drop to just 15% – if his proposal is accepted. Some speculate this will generate loss of revenue for the country rather than economic gains. However, Trump time and again has told the media that a cut in corporate taxes would boost hiring and production for those companies. Furthermore, he theorizes that lower taxes will equate to lower prices on products and services too.
Plenty of positives come with the proposed reform too. For starters, the proposal includes an increased standard deduction for households, and there is a modest tax cut for middle-income families. The process of filing a return is simplified in his revised code too.
The plan also ends the home mortgage interest deduction. Real estate agents and home builder associations argue that a cut like that would decrease the benefits to owning a home, thus decreasing sales in the country.
Swelling Federal Deficit Forces Opposition to Question Plan
While there is plenty in the tax reform, an equal amount is missing. The $1 billion infrastructure is not in the plan, but Trump’s team promises that the imposed tax rates for foreign companies and other increases will account for the funding.
The new scheme does cut off the difficult portion of the tax code. Ultimately, it simplifies taxes for everyone. There are loopholes finally closed off too – something his opposition seems to neglect to mention. Furthermore, the proposed plan increases other taxes so limit the impact of the dramatic cuts elsewhere in the reform.
However, these benefits might not fully address the deficit. That said, Democrats tend to highlight the business cuts and how they would help Trump’s enterprise too. They do not, however, mention how much revenue the country would gain with the additional taxes collected.
Democrats are particularly critical of the plan’s impact on the real estate market. Some have already spoken out about way Trump’s reforms are set up to benefit him, and not the American public, though others point out that Democrats aren’t seeing the bigger picture.
Many Republicans support the lowered taxes, especially for small and large businesses. Right now, corporations are required to pay an astounding 35% in taxes. The cut to just 15% would dramatically improve business profit margins.
For now, Trump’s plan has its pros and cons, but it ultimately be up to Congress to digest and decide on.