Trump to rally manufacturers in tax speech Friday
- Author: Leroy Wright Oct 01, 2017,
Oct 01, 2017, 6:38
The document represents the first step in what will be ongoing negotiations between Congress and the administration on how to create a simpler and fairer tax code that benefits USA businesses, American workers, the middle-class and the economy at large.
President Donald Trump said on Friday that the centrepiece of his economic plan is a "giant, beautiful, massive, the biggest ever in our country, tax cut". Like most Republican tax proposals, it appears to be roughly neutral for middle-class families and a boon for the rich-though I'm sure the Tax Policy Center will provide the grim details soon.
But that's nonsense. The paper Mnuchin removed was from 2012. The proposal reduces some of the itemized deductions that tax attorneys for the wealthy use to keep money from the IRS.
Mnuchin is trying to pretend that, to the American corporation, the American worker is more than just COGS.
And the special rate the tax plan introduces for "pass-through" businesses would mostly help the wealthy, including Trump, as well. We're reducing taxes on businesses, so they can invest in people, and making people more productive rather than sending the money to Washington, D.C.
This is not a case of "well, of course rich people get the biggest slice of the tax cut - they have the biggest incomes". A modern age needs a modern tax code.
The plan includes a reduction in the corporate tax rate to 20% from 35%, a consolidation in the personal income tax brackets to three from seven, and a sharp increase in the standard deduction.
Lawmakers are likely to offset at least a portion of the revenue loss by eliminating or curtailing of lots of tax breaks, including some sacred cows.
That fact alone should require enough obfuscation to keep a man of Steve Mnuchin's rare talent for perpetuating drivel busy, but there's more. That is up from the original proposal in April of 15 per cent, but far lower than the top tax rates now faced by high-income earners of 39.6 per cent.
"For the majority of American manufacturers that file taxes as sole-proprietors, S corporations or partnerships, we will cap your top tax rate at a maximum of 25 percent", Mr. Trump said. In the core principles, the group said tax reform should eliminate the long-standing tax exemption for credit unions. "That means more production, more investment, and more jobs", Trump continued.
In describing the new tax rate, the framework cites its impact on "small and family-owned businesses", but pass-through entities range from mom-and-pop grocers to major, closely held businesses, including Trump's companies.
Successive rounds of federal tax cuts have eroded progressive taxation and helped increase wealth inequality in the USA, according to research by the economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California at Berkeley. In fairness, Trump simply hasn't as much scope for reduction as Reagan did, since the top rate in 1980 was nearly double what it is now. Currently, it's taxed as capital gains, at rates as low as 20 percent. If they wanted to encourage hiring they could double the deduction for employee costs. Only 5,460 estates even pay the tax each year, according to a credible estimate, and of those, about 80 represented small businesses or farms. This isn't for anyone but corporations.
The Trump administration vows that the increased economic growth will more than make up for lost revenues.