David Haggith Blog | Tiny Trump Hands Deliver Teeny Tiny Tax Plan, US Stocks Collapse In Despair | Talkmarkets - Page 2
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David Haggith lives in the Pacific Northwest and is the author of DOWNTIME: Why We Fail to Recover from Rinse and Repeat Recession Cycles and publisher of The Great Recession Blog for eight years, ... more

Tiny Trump Hands Deliver Teeny Tiny Tax Plan, US Stocks Collapse In Despair

Date: Thursday, April 27, 2017 11:40 AM EDT
  • The plan will eliminate estate taxes, which only the wealthiest Americans now play, helping Trump and family considerably in the future, but most of you not one iota. (This is a cut 100% for the rich, but it makes things equitable.)
  • The White House compensates for this by saying some other tax breaks that help the rich will be eliminated so that the plan would largely help the middle class; only, as usual, it doesn’t specify what those “other” current tax breaks are that will be eliminated. (So, read that as, “Just trust us on this one.”)
  • The new, new New Trump Tax Plan contains no math to show how much of a deficit the new plan will create, but co-creator Cohn offers assurances that the tax cuts “will pay for themselves” through economic growth and that the president knows we have to “be good stewards.” (“Just trust us on that one.”)
  • The plan comes with Cohn’s personal assurance that the president “will get this done for the American people.” (I feel better knowing that assurance is still being offered as it was in past months. I do note, though, that missing their stated and revised schedules during those months now leaves them simply assuring us it will still get down, but without anymore undoable deadlines.)
  • Corporate taxes will fall from 36.9% to 15%. (That will include closely held businesses and limited partnerships, like legal firms, construction companies in the oil industry, and … real-estate companies, where business income largely passes through to the owners (sometimes the family) so the business does not pay the tax but the owner does when the money passes through. (In other words, the bulk of Trump’s income tax — and his children’s — will drop from 35% to 15%, except that the plan comes with a footnote that this will be done in such a way as to insure that wealthy Americans do not exploit the change. So, we’re good!)
  • The plan reduces the number of tax brackets to three simple levels (10, 25, and 35 percent), and states the tax rate of each bracket. (Unfortunately, it omits stating what income levels will apply to each bracket.)
  • The plan comes with a note that details will be hashed out with the House of Representatives and the Senate in coming weeks. (Maybe months? Like the Obamacare repeal details got hashed out … of existence?)
  • “We know this is difficult,” Cohn said. “We know what we’re asking for is a big bite.” (That’s a plus because with Obamacare, “who could have thought it would be this difficult?” At least, now they’ve learned it is difficult. They have learned something on the job, so we can feel good about having a smarter team.)
  • It does help some of the middle-class by doubling the standard deduction for married couples, and it maintains the allowance for charitable deductions, and it says it will allow tax relief for childcare expenses (though, again, without any details).
  • The plan promises to alienate anyone who lives in a state with high state income taxby making state income tax no longer deductible. (No help if you’re not in such a state, and a bite in the butt if you are; but the plan softens this news by noting that this effects higher income people the most — well, yeah, the ones unlike Romney and Trump who have been known to pay no state income tax.)
  • The plan simplifies tax code (albeit it doesn’t tell us how, just that it WILL). This will presumably happens when congress actually sits down to create the plan with laws under Trump’s instruction that the laws be more simple. (Trust us on that one, even though everything we’ve simplified so far has been ruled unconstitutional in a court of law or died in debate.)
  • Repatriated corporate profits will get a one-time major tax reduction, but all profits made overseas after that will be completely tax free for years to come! (That’s a glory-hallelujah! Well, except for the detail that the tax rate for repatriation is omitted. But, hey, at least they’re thinking about it! And they’re gonna do something! Those cuts will be the “biggest in history!” We just don’t get to know how big until they figure that out. Details.)
  • One thing that is NOT mentioned in the Trumped-up Tax Plan is capital gains tax. If the lack of mention means there will no longer be a special capital-gains tax rate, the elimination of that gift, which goes largely to rich stock and real-estate speculators who can pay to play in that realm, is something I will like. (But the plan doesn’t say one way or another, and you can be sure Republicans will insist on putting that objectionable trickle-down part in as details are “hashed out.”)
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