This is only my opinion, and not the representation of Saintel Daily, LLC.
Donald Trump pretends to have the “common” man in mind. But he really doesn’t. Trump has unveiled his new tax plan, which promises to “deliver historic tax relief to the American people”, but that’s not really true. The tax relief is going to help corporations. And I guess if you consider that the “American people”, then it will. But my guess is that you don’t think of them that way.
Let’s put this into perspective, but based on estimates only. If you make more than $732,800 a year, your tax cut would be, on average $129,030. Which means you would get to keep 8.5% of your income that is currently going to taxes. If you make at least $3.4 million a year, you would get $722,510 back on average. This would give you 10.2% back into your pocket. But if you’re the middle class this really isn’t going to do much for you. Middle-class Americans fall into the $48,600 to $86,100 income bracket. They would get $660 back, which is a 1.2% boost. Can you see where I’m going with this? To further demonstrate the disparity, the poorest Americans who earn $25,000 or less would only get $60 back per year.
You can definitely see how this would make the rich get richer, and the poor, well, they would stay the same. I don’t think anyone could argue that an increase of $60 a year means that you’re getting “richer”. Like I said, these numbers are estimates and are being given to prove a point. Which is that this isn’t going to work. But folks who are in the $216,000 to $307,900 bracket would actually see a tax increase. The average tax increase would be about $3,000, and this is largely due to the proposal’s decision to eliminate most itemized deductions and in particular the deduction for state and local taxes.
The big concern, in my opinion, is that this tax reform is actually going to cost $2.4 trillion in revenue over 10 years. The other concern with the plan is how the government wants to bring overseas money back into the U.S. The concern is that it would be at a reduced tax rate. Apple, for example, would bring about $246 billion back into the U.S. If Apple brought that money back right now, they would have to pay $60 billion in taxes. But under Trump’s plan, they would only have to pay $20 billion. Which is maybe a good way to get Apple to bring it’s cash back, but you’re losing out on $40 billion. (Again these are estimates) The only benefit to Apple in this situation would be that the EU is cracking down on the practice of squirreling away funds in some countries.
What makes all of these proposals interesting is that during a 2011 Senate investigation, it was discovered that approximately half of the income held overseas is invested in the U.S. treasuries or the U.S. stock market. The funds may be owned offshore, but it’s invested in the United States. Which means, there is no tangible benefit for the U.S. economy to bring these funds back. Because they’re already here. It’s also interesting how Trump is packaging this as a new tax idea. In 2004, Congress attempted to do the exact same thing. They saw an influx of $312 billion in gross revenue repatriated to the United States.
This whole tax proposal seems to not make a lot of sense. And if you can make heads or tails of it, it’s certainly not anything new. So what is Trump’s goal with this? My guess is that there is something buried in there that is going to benefit him either personally or a corporate. But whatever it is, this is something to keep a close eye on. I am also wondering why this is coming forward now? Doesn’t he have a bunch of other things to think about like hurricane aid, or building his wall?