Some of the details of President Donald Trump’s tax plan emerged on April 26, and if you’re one of the tens of millions of Americans who pay taxes, you should be more than just a little excited. In fact, if you’re standing up, you might want to sit down as I walk through his proposed changes.
For starters, Trump’s plan simplifies the tax code from seven brackets to three, which means calculating your current and future tax liability is going to be a lot less complicated than it has been in the past. The three rates under the Trump plan would be 10 percent, 25 percent and 35 percent, dropping the top marginal rate from 39.6 percent.
Although key details of the plan indicating the income levels that would correspond to each rate have yet to be revealed, it’s expected many U.S. households will only end up paying 10 percent under the plan for most of their income, and the White House has made it clear the focus of the entire tax plan is to lower the burden for middle-income families.
In addition to the lower rates many middle-income Americans would enjoy, Trump’s plan would nearly double the deduction for married couples, to about $24,000. This means tens of millions of families will have their taxable income drop by $12,000, at minimum, saving many families thousands of dollars each year.
To help spur economic development, the plan will also drop corporations’ top marginal rate from 35 percent, one of the highest rates in the world, to 15 percent. The top marginal rate for small businesses would also fall dramatically, from 39.6 percent down to 15 percent.
Trump’s plan eliminates the alternative minimum tax, ends the dreaded estate tax—a tax on property inherited after people have died, which is particularly harmful to farming families—and it will end the 3.8 percent investment tax imposed by the Affordable Care Act.
All together, this tax package is being touted by the White House as the largest tax cut in the history of the country.
“We want to move as fast as we can,” Steven Mnuchin, the Treasury secretary, said today, according to a report by the New York Times. “This bill is about creating economic growth and jobs.”
To help offset some of the costs related to the tax cuts, Trump’s plan eliminates many deductions, with three key exceptions: charitable giving, child care expenses and mortgage-interest payments.
By cutting most of the deductions out and doubling the standard deduction for married couples, Trump is effectively simplifying the tax code for the vast majority of Americans, who will now need to do very little math when filing their taxes.
Regardless of what you might think of Trump, if you’re a conservative who believes in limited government and reducing taxes, this package is an undeniable home run. Trump’s plan will infuse the American economy with much-needed cash by allowing Americans to keep most of their own money. It will help people save for retirement, pay for college, buy a new home and enjoy life. Instead of sending billions of dollars to wasteful government agencies, more Americans will have the ability to choose to spend their money on whatever they please.
Liberal Democrats have already started to attack Trump’s plan. Rep. Nancy Pelosi, the House minority leader, said in a statement, “The same Trickle Down Economics that undermined the middle class are alive and well in the President’s tax plan. True to form, President Trump’s tax plan is short on details and long on giveaways to big corporations and billionaires.”
— Nancy Pelosi (@NancyPelosi) April 26, 2017
What Pelosi and other Democrats won’t admit, however, is that the high-tax, endless-regulations scheme put into place under the Obama administration failed to produce the kind of meaningful economic expansion so many Americans have been restlessly waiting for over the past eight years.
A report produced by The Heartland Institute, where I serve as executive editor, found, “Obama’s economic policies produced the worst recovery from a recession since the Great Depression, worse than what every other president faced with a recession has achieved since the 1930s.”
That same report found if the economic recovery under Obama had occurred at just the same rate as the average of the previous 11 recoveries occurring since the Great Depression, family incomes today would, on average, be $17,000 higher and there would be 6 million more jobs.
If tax-and-spend policies work, then why didn’t they work during the past eight years?
Trump, Republicans in Congress, and Republicans in state houses across the country ran on a low-tax, pro-business platform, and Americans elected them into office because of it. The people are tired of hearing the class-warfare blathering constantly emanating from the mouths of Democrats. Middle-class Americans have demanded change, and if this tax plan becomes law, they will finally get it.
It’s time for Congress to finish what Trump started, by passing these important reforms into law and helping the nation move toward a real economic recovery.