Trump’s Wreck of a Platform(Part 3: Tax Reform)
Like the other GOP runners, Trump has proposed a new tax code. He markets it as “simple” and “friendly” to the average citizen. However, Trump’s tax reform plans are hugely expensive as well as designed to give the most tax relief to the nation’s wealthy. While some believe that tax reforms must be made, Trump’s will only hurt our country.
First of all, let’s explain the current tax code. It’s broken up into several brackets, each with a different tax percentage. For example, someone earning $18,000 a year would have their first $9000 taxed at 10%, and the rest taxed at 15%. If that person happened to change jobs and now makes $50,000 a year, he or she would have to pay 25% on about $12k of his income as well. The system also subsidizes child-care and other costs of living. Account for several credits, which take away from taxes owed, and deductions, which reduce taxable income, and we see that America currently has a progressive tax system designed to make the rich pay more than the poor.
Trump’s plan aims to do the exact opposite, which is why it’ll ultimately fail. His main goals are to “simplify the tax code” and to “let everyone keep more of their money.” Even before getting into the details, such a plan is unfeasible—if citizens collectively pay less taxes, it’s obvious that the government won’t have as many taxpayer dollars to pay for the very programs and benefits that American citizens take for granted. However, let’s see exactly why Trump’s proposed plan is no good.
He claims single filers making less than $25k($50k for married couples) won’t owe any income tax. This seemingly-generous statement actually has little effect on the economy, even if it does seem relevant to almost half of American households. While single filers making $25k would in theory owe a couple thousand to the government, they usually claim enough credits and deductions to break even. In fact, about 45% of Americans don’t pay any federal income tax, The majority of these people are low-earning single filers. Even if they do owe money, it is an insignificant amount, meaning that this entire section of the plan is only a marketing ploy.
Exempting the married couples earning less than $50k from paying taxis a little more interesting. These pairs usually owe about $3k to the federal government, taking personal exemptions and standard deductions into account. While there was no specific data to forecast exactly how much the government would lose, the number would most definitely be in the billions.
Adding on, Trump claims he can reduce everyone else’s taxes as well. Although he sells his plan to the middle class, the rich are the real winners; America’s elite will be able to save massive sums of money in their already-hefty bank accounts from the high reduction in tax rates. Someone making $250,000 a year would only pay 2/3 of his or her original tax, while the wealthier would benefit even further.
On a side note, Trump also plans to cut the corporate tax by over half. This part has already been mentioned in a previous post, but in essence, it’s only beneficial to some degree. Lowering America’s high corporate tax to an extent reduces inversion(companies going abroad to be taxed at a lower rate) and creates an incentive to start a business. Unfortunately, lowering the tax rate to 15% also severely cuts into the government’s revenue.
Although this tax plan will supposedly be revenue neutral, the claim is hard to believe. No matter how many deductions Trump promises to take away from the rich, he will be embarrassingly short of his goal. To even come close to maintaining the budget, new taxes would have to be created while current ones increase. The government will need to collect more of its budget from daily transactions. With food, rent, and other basic goods becoming more expensive, the cost of living will start to increase.
The wealthy won’t have a problem. as the money they save from taxes will likely cover any new expenses. However, the lower earners will; since they save little, if any, money from tax breaks, they will suffer the reciprocations of a higher cost of living.
Estimated to cost trillions over the next decade, Trump’s proposed tax plan can only hurt America. Within a year of its implementation, the government will be forced to either change the system or raise other taxes, hurting the poorest citizens, those America has the largest obligation to. Either way,Trump’s numbers don’t add up; hopefully, votes for him won’t either.