So, Trump released his tax plan. It’s, predictably, about as bad as everyone expected, even some conservatives. As one Derek Thompson from The Atlantic explained:
“Trump’s tax plan is, for now, only about 100 words long. But as law, it would dramatically change the way individuals and businesses pay taxes.
For individuals, the plan would:
- reduce the number of tax brackets from seven to three and cut the top marginal rate from 39.6 to 35 percent
- double the standard deduction, while eliminating most tax breaks except for home ownership and charitable deductions
- repeal several taxes, including the Alternative Minimum Tax, the estate tax, and the Obamacare tax on investment income
For businesses, the plan would:
- reduce the corporate tax rate to 15 percent, paid for with unspecified cuts to “special interests” and a “one-time tax on trillions of dollars held overseas”
- allow small-business owners to have their income taxed at 15 percent, as well (much more on this later)
- move to a territorial tax system, in which businesses would only pay tax on income earned in the U.S. (so, Boeing wouldn’t pay taxes on planes sold to an Australian airline)”
So, functionally, it’s a big tax cut plan. It is most definitely not net neutral, and very net negative with the American Government standing to lose trillions over the course of ten years. The problem is certain aspects of the tax code in America do need to be rewritten or replaced, corporate tax needs to be done in such a way that encourages business while ensuring multinationals like Apple and Google actually, you know, pay taxes and small business owners shouldn’t be penalized for not being as large as their competitors so should receive a similar tax as well, and far more besides including things I am simply not aware of.
The problem is Trump doesn’t have any idea how to make a plan like that, seemingly no Republican does and above all none of them are willing to do the hard, long slogging work of actually sorting through the tax code to find out what needs to be done, not now and not during the transition period when they should have started.
Basically, no one knows what the hell they’re doing, and predictably this is the result.
The Atlantic: A Comprehensive Guide to Trumps Tax Plan