Trump’s new tax plan

Sean W. Cooper, Staff Writer

Sean W. Cooper is a sophomore at UNCW majoring in Communication Studies. He is a staff writer for The Seahawk. The opinions expressed in the article are solely those of the author. Sean W. Cooper may be found on Twitter @SWWCoop. All suggestions and inquires may be sent via email to [email protected] 

Once upon a time, I was a fan of President Donald J. Trump. I supported his candidacy for leading the free world, I voted for him and I eagerly anticipated his inauguration this past January.

It went downhill quickly from there. Arguably, the man’s only notable accomplishment during his first 100 days was appointing Neil Gorsuch to the Supreme Court to replace the late Antonin Scalia.

Despite his promises to unify America, he has had trouble pushing through the most signature points of his agenda, including the proposed immigration ban, the repeal and replacement of Obamacare and that gosh-darn wall, have all but come to fruition (Let’s not forget his proclivity to behave like a child rather than a commander-in-chief.)

This is a testament not only to the importance of checks and balances in America or to the ideological division that exists within the government, but also to his ineffective leadership.

However, his new plan for the American tax code, unveiled Wednesday at a rally in Indianapolis, Indiana, sheds a new light on his presidency. While it doesn’t change the way I view him or how many other Republicans both in Congress and among the American populace view him, it certainly appears to be a step in the right direction.

The White House hopes to push the new tax plan through Congress by the end of the year and I am quite content to say that I can actually see this happening. Not only that, I can also see it becoming a highlight for the Trump administration, as well as something for which Republicans and Democrats alike will remember Trump when he leaves office in 2021 (or, as his most ardent supporters seem to believe, in 2025).

If there’s one reason why the new tax plan is admirable, it’s because it is fair and agreeable. Trump campaigned on lowering the top tax bracket to 25 percent, a move that a whole slew of economists (most notably the Tax Policy Center) said would promise a drastic increase in the already debilitating level of debt America faces.

The new tax plan however, yields a top bracket of 35 percent. This doesn’t sound much lower than the current tax bracket of 39.6 percent, implemented by President Barack Obama following the Great Recession, but a cut of 4.6 percent on the upper class is ostensibly an amount large enough to promote significant job growth without putting the country in an economic hooplah.

What is even better about this tax plan is that it strives not only to cut income taxes but also to simplify them. According to the Washington Examiner, the tax code was a scarce 400 pages long when it was first implemented in 1913 and it had grown to just 504 pages by 1939.  By 2004, however, it had amounted to 60,044 pages, then peaked at 74,608 pages in 2014.

We may see that number decrease substantially with the White House’s new tax code.  It strives to meet Speaker of the House Paul Ryan’s vision that, as he described it in a speech on August 8, “you can do your taxes on a form the size of a postcard,” according to CNBC. While this seems a bit of a drastic example, it would be a saving grace for all Americans if the process of filing taxes were reduced at all.

This starts with closing loopholes that allow the wealthy to save money, namely by keeping it overseas.

“By making it less punitive for companies to bring back this money,” Trump said at a rally in Missouri late in August, “we can return trillions and trillions of dollars to our economy and spur billions of dollars in new investments in our struggling communities throughout our nation.”

This process continues by not only lowering the current tax brackets but also consolidating them, as well as removing any loopholes that exist for tax filers. Our current tax code breaks up into seven different brackets. They are very unevenly distributed, with the 33 percent tax bracket spanning incomes ranging all the way from $190,151 to $413,350 for single filers and the very next bracket (35 percent) spanning incomes in the small range from $413,351 to $415,050.

The Trump tax plan aims to consolidate this mess into just three brackets: 12 percent, 25 percent, and 35 percent. On one hand, this may disadvantage the poorest of the poor, who currently give only 10 percent of their income to the government, if they are single filers making $9,275 per year or less or married joint filers making $18,550 per year or less.

However, these three brackets also promise substantial cuts for the middle and upper classes, who are the very ones who create jobs for the lower class. While this is definitely Reaganomics in the works — cutting taxes at the top to see employment gains at the bottom — it is only so to a degree that we may indeed see gains in employment, rather than the massive gains in wealth inequality that we saw during the 1980s.

Trump’s plan even offsets the tax hike on the lower class by nearly doubling the standard deduction, from $6,350 to $12,000 for a single person and from $12,700 to $24,000 for married couples who file jointly. This means that although some may pay a higher rate under this new tax plan they can also write off more, which could potentially result in a tax break.

A more troubling component of the Trump tax plan is its plans for the corporate rate. This rate applies to the biggest and most powerful companies in America. Perhaps a small cut would see job growth, mirroring what we see in the plan’s cut on income taxes. However, nearly cutting the corporate rate in half, from 35 percent to 20 percent, would incentivize the wealthy to hoard the wealth they earn from leading large corporations.

To counter this though, is Trump’s plan for small businesses which, according to CBS News, account for roughly 95 percent of businesses in the U.S. Small businesses are currently taxed as high as 39.6 percent (equivalent to the top income tax bracket), but under the Trump tax plan this will be cut to 25 percent, incentivizing growth in both employment and profits for small businesses.

A final, and arguably the most admirable, revision the Trump takes plan proposes to make is to eliminate the estate tax, also known as the inheritance tax or the death tax.  Many would argue that part of the American Dream rests in one’s ability to pass one’s wealth down to one’s children, but this cannot be fully achieved when up to 40 percent of a deceased person’s wealth is required to go to the federal government, according to the Internal Revenue Service.

While most of the plan is about as bipartisan as we can reach in a country so ideologically divided, this specific reform is something Republicans and Democrats can unquestionably both champion.