Now the fight over tax reform begins.
https://apnews.com/f609602269d54524aa14e1d9c74ec97c
Some details:
1. Double the standard deduction to $24,000 per couple/$12,000 per individual
2. Cut corporate rate from 35% to 20%
3. Reduce tax brackets from 7 to 3
4. Leaves intact mortgage interest and charitable donation deductions
5. Increases bottom tax rate from 10% to 12%
Sen. Chuck Schumer says Trump’s plan only gives “crumbs” to the middle class, while top-bracket earners making more than a half-million dollars a year would reap a windfall.
The New York Democrat also blasted the plan for actually increasing the bottom tax rate from 10 percent to 12 percent, calling it a “punch to the gut of working Americans.”
Schumer said the plan is little more than an “across-the-board tax cut for America’s millionaires and billionaires.”
President Donald Trump has two red lines that he refuses to cross on overhauling taxes: the corporate rate must be cut to 20 percent and the savings must go to the middle class.
Gary Cohn, the president’s top economics aide, says any overhaul signed by the president needs to include these two elements.
Trump had initially pushed for cutting the 39.6 percent corporate tax rate to 15 percent.
The administration says that the benefits of any tax cut will not favor the wealthy, with Cohn saying that an additional tax bracket could be added to levy taxes on the top one percent of earners if needed.
Starting from the top, I like 1-3. Higher standard deductions are the lowest hanging fruit when you want to provide a greater positive impact on low income families. The lower corporate tax rate is easily politicized, but easily understood thanks to corporations like Apple keeping massive amounts of cash offshore. Repatriation of that money, and of entire corporations, would go a long way toward helping the economy and increasing our tax revenue. Fewer tax brackets simplifies the tax code, always a good thing. This is also the most likely place to game tax cuts for those who
donate to campaigns earn the most, so it will deserve the most scrutiny.
Increasing the bottom tax rate from 10%-12%? What are they thinking here? Yes, it's obvious to anyone with multiple brain cells that the people in the bottom tax rate will still benefit from this plan overall, thanks to the doubled deduction. It should also be obvious that this increase will be painted in the worst possible light when the story runs on the nightly news and Twitter feeds.
My hope is that this is a placeholder, thrown in to allow Schumer to negotiate it away. The failure to include the extra bracket for the top 1% in the initial plan falls into the same category. That hope seems ridiculously optimistic.
