I call these suggestions, since his one page release can hardly be called a plan. However, while the right wing media and conservatives are rightfully calling this the biggest tax cut in American history, it is worth time to consider the benefits to different groups of Americans. I present here some links to the source material I consulted for this article. Click on any one to go to the material.
Figure 1, the spreadsheet below, was created by using the resources above, and calculating the taxes for a household at the median of their level. Because different sources present their numbers differently, I was unable to fill in all of the tables cells.
As you can see from the spreadsheet above, 75% of Americans will receive a tax break of a thousand dollars or less. Note that in some cases, individual American households will pay MORE tax.
Consider now the case for our President, whose 2005 tax return showed that his income was roughly $48,500,000. He paid a total of roughly $36,500,000 in taxes which was comprised of $5,300,000 of standard income tax and $31,200,000 of alternative minimum tax. Under the President’s suggestions, the Alternative Minimum Tax would be eliminated, and this would mean almost $32,000,000 of savings. His tax rate change would result in a tax savings of roughly $500,000. Additively, these changes would result in a tax break of over 88% of his original tax amount. This is also true for all his billionaire buddies. The top 1% of households (1 million) in the US will save similar amounts of money, losing billions in tax revenues which fund programs like meals-on-wheels, Medicaid, medical research, etc. Do we really need to give those people an 88% tax break? Do these billionaires suffer under a crushing tax burden? Going back to a 1987 movie “Wall Street”, I have to ask: “How many yachts can you water ski behind? How much is enough?” Here is how the income of Americans has behaved since trickle-down economics was instituted, and pro-rich and pro-big-business policies have dominated.
Discussion of the tax rate changes and effects, of course, does not account for the taxes lost when the tax plan eliminates the estate tax, which only affects estates of larger than about five and a half million dollars. Again, this affects only the top one percent. It will certainly make more money for Donald Trump’s children after he passes. They will already inherit billions. Should we cry over the millions they lose to inheritance taxes?
The long term effects to this nation will be felt as the government has far less revenue. The chart below shows how the deficit will be affected by these tax cuts.
It is certainly amazing that the Republican Party spent 8 years talking about how bad the deficit was under President Obama, but now proposes to explode the deficit instead of handling it. For exploding the deficit, which our children will pay for, the US gets NO new roads, bridges, better health care, NOTHING. Just a money-as-cocaine fix for the super rich. The reason this is the Republican plan, is that almost all of them owe their seats to the Dark Money provided by the cadre of right wing billionaires. This plan is the pay back for all that investment.
When government has so much less revenue, and no ability to raise it through taxes, it will be faced with having to make DEEP cuts in spending to decrease the deficit. Cuts could be less deep if there was more money available. Or, if the cuts stayed very deep, the deficit could be reduced faster, and the US could get out of trouble quicker This massive tax cut for people who don’t need it will come at the expense of poor and middle class people later when the cuts are made.
It is true that both republican and democratic governments have over spent, and are addicted to spending. Pork, graft, and corruption are huge problems. Cuts are going to be made. But having to cut deeper because billionaires cry themselves to sleep over the small amount they can’t keep is not right. It is not prudent. It is corrupt.
There is so much that is unknown about the details that must evolve in association with the President’s suggestions. Without details about medical expense deductions, Earned Income Credit, child care deductions, and more, it is always possible to say that current analysis is premature. However, one can only analyze what has been presented, and what is here is deeply flawed.
Please tell your representative that tax cuts for the poor and middle class are helpful, and will stimulate the economy. Please tell your representative that tax cuts to give billionaires more is deplorable, and that you will remember at the next election cycle.