President Donald Trump has offered us a little hint into the tax reform plan he wants to unveil on Wednesday. He has demanded aides to draft a plan that cuts the corporate tax rate to 15%.
It would help him keep one of his campaign promises. On the trail, he vowed to bring the tax rate to 15% from 35%. Yet, it could cause a fight on Capital Hill. Republicans want to cut taxes, but they cannot agree on how much.
The government can easily solve this problem if they would stop spending so much money. After all, as Kemberlee blogged, Americans will spend more on taxes than food, clothing, and housing combined in 2017.
Trump needs all Republicans on board because we all know Democrats will not support anything his administration proposes. It’s why the healthcare reform bill failed. A lot of Republicans in Congress refused to support it and Ryan could not even bring it to the floor. Bloomberg reported:
While Trump and Ryan broadly agree on sharply cutting individual income and corporate taxes, there are areas of disagreement between the two. On the campaign, Trump called for a corporate tax rate of 15 percent; Ryan wants 20 percent, and he has warned that cutting it an additional 5 percentage points could prevent the ultimate tax plan from being revenue neutral. Without Democratic support, a plan would have to be revenue neutral to meet the criteria set by lawmakers to make tax changes permanent.“I’m not sure he’s going to be able to get away with that,” [Senate Finance Committee Chairman Orrin] Hatch told reporters Monday. “You can’t very well balance the budget that way.”
Treasury Secretary Steven Mnuchin and economic adviser will speak with Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, and Hatch.
Mnuchin will discuss the tax reform efforts at an even hosted by The Hill at the Newseum on Wednesday from 8-9:35AM ET.
Mnuchin spoke to reporters about the tax plan:
Asked Monday if the president’s tax plan would be revenue-neutral, meaning it wouldn’t add to the debt, Mr. Mnuchin told reporters that it would “pay for itself with economic growth.” By that he meant that the administration expects to be able to project faster growth due to tax cuts, which would in turn increase revenue and avert the risk of bigger budget deficits. Many economists doubt whether economic growth can ramp up on a sustained basis without a big pickup in productivity and labor-force growth, and it is uncertain the tax-policy changes would do that.
Jared Bernstein, economic advisor to former Vice President Joe Biden, disagrees with Mnuchin:
“They will lose a boatload of revenue that we can’t afford to lose and far more than this team will offset by closing loopholes,” said Jared Bernstein, who was an economic adviser to former Vice President Joe Biden. Cutting marginal tax rates for businesses could generate some economic growth, he said, but not nearly enough to pay for itself with increased revenue.“These promises about all kinds of growth and investment that are going to be triggered by these tax cuts never appear, and the empirical historical record is clear on that,” Mr. Bernstein said.
Trump released a tax plan as a candidate, which the Tax Policy Center analyzed in November. It concluded that his plan, “coupled with a repeal of the corporate Alternative Minimum Tax, could reduce revenue by $2.4 trillion in the first decade.”
However, Mnuchin is correct. It can pay for itself with economic growth. Let me explain this to those who hate big businesses and evil corporations.
The less taxes companies have to pay, the more those in charge can invest into the companies. Therefore, it will allow the company to grow, thus creating jobs. It allows the company the flexibility it needs to be competitive.
More jobs means more people in the workforce. This gives people more money, which they can spend and put into the economy.
Yes, it’s that simple. It will not happen overnight, but it will happen. Also, the government would not need so much money if it would STOP SPENDING. But I forgot. Private companies and people must budget and cut spending if they have no money. Not the government.
Or how about this scene from the movie Dave?
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