here President Trump and the Republican party are very interested in reforming the tax code to reduce taxes on corporations and the wealthiest Americans. They claim that giving tax breaks to the wealthy and large corporations will trickle down through the creation of additional jobs and opportunities for lower income Americans. Critics cite how this tax reform would primarily benefit people just like Donald J. Trump himself and would do little to help most Americans.
go site Here are just some of the reasons why the tax reform plan will not work out the way it is planned.
Creating a Bigger Deficit
Donald Trump’s tax plan would reduce the top tax percentage, repeal the estate tax and reduce corporate taxes. Some positive things could come from this change, but regarding his plan to double the standard deduction, all of these actions would create a larger deficit for the government due to less money collected as tax revenue. Eventually, the government would have a difficult time functioning.
For instance, only the wealthiest families pay the estate tax on money more than $5.49 million. It doesn’t happen often, but it helps close the deficit. Additionally, Trump’s plan includes eliminating tax breaks for low- and middle-class American families; this means they’d potentially pay more because of the loss of these deductions.
We’ve Tried This Before
Supply-side or trickle-down economics is not a new concept. In fact, it has a history in the United States as far back as the 1890s. The concept was again popular in the 1980s. In almost every instance, the idea of giving more money to the wealthy and corporations has not helped everyone else. The exception to this is during recessions when extra revenue and opportunity created through these types of actions can sometimes help.
Rich Could Just Pocket the Money
Ultimately, this type of tax plan easily fails because there’s no mechanism to enforce companies to create jobs with the extra money they’d get to keep. They could just pocket the money and keep it as revenue to distribute to top executives; this is true for wealthy people, as well.
Whether or not Trump will be able to get his tax reform policies through remains to be seen. If he’s successful, corporations and the elite class will be happy with the outcomes. Tax reform tends to come in cycles, and eventually, when it doesn’t work, it may get repealed again.