The same seems to be happening with tax reform. It represents only a general agreement among six negotiators from the Trump administration, the Senate and the House. The Tax Policy Center says 12% of tax filers would see their taxes go up in 2018 because of the plan. "I remain opposed to eliminating the deductions for state and local taxes as this would represent, in effect, double taxation on the taxes paid to state and local governments". In a time of extreme wealth inequality, this is the last thing Congress needs to do.
This decision will first fall to the budget committees, which set the budget blueprint for the next year. If so, they've badly marred it with provisions that will inevitably give voters quite a different vision: of a party that has stopped even pretending to care about tax cuts for anyone but the rich, and of a president making a generous gift to himself.
The question is how much. Nevertheless, a preliminary report from the fiscally conservative Committee for a Responsible Federal Budget said the cost to the treasury could come to $2.2 trillion over 10 years. An increase in the child tax credit could offset the loss of personal exemptions, but the amount of the boost isn't known.
But deciding on so-called pay-fors can be like political suicide for lawmakers since several may greatly benefit their states' industries and their other constituents. But it only took about 24 hours after the mostly vague framework was released for a very real (and predictable) existential problem to emerge. Now, the legislative focus will shift to tax reform, which Trump has been eager to tackle since taking office.
Uncle Sam raises relatively little revenue as a share of gross domestic product from corporations, and less capital is invested at home because trillions of dollars stay overseas.
"It does not address sophisticated modern tax-avoidance techniques, such as Larry Ellison, who is worth $50 billion, getting a $1 salary and borrowing against the value of his appreciated stock, or companies such as Apple directing their global profits to tax-haven subsidiaries", Shaviro added.
Along with lying about whether his tax plan would be good for him, Trump also went back on his earlier call for the corporate tax rate to be reduced from 35 to 15 percent during his Wednesday speech announcing the plan. In fairness, Trump simply hasn't as much scope for reduction as Reagan did, since the top rate in 1980 was nearly double what it is now. In the 1990s, the pitch was tied to a "flat tax" - one tax rate for all income and, yes, a postcard-sized tax return. "The wealthy get a tax cut", our Heather Long writes.
Advocates of the blueprint, including President Trump, promise that reform will offer middle-class tax relief and keep the tax code at least as progressive as it is today. The powerful and well-connected have made Washington lawyers rich through years of lobbying for special perks, leaving ordinary Americans with an unfair tax code, riddled with loopholes. His proposed elimination of the estate tax could be an enormous benefit for his heirs.
The top individual tax rate is 35 percent.
"For the majority of American manufacturers that file taxes as sole-proprietors, S corporations or partnerships, we will cap your top tax rate at a maximum of 25 percent", Mr. Trump said.
"We think that is going to help bring more investment and more income back to the USA rather than keeping it offshore, and it will help level the playing field for our companies so they can better compete with foreign companies that already have that kind of tax treatment", the official said.
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