The Trump Administration and the Republicans that control Congress want to pass into law new tax cuts. These cuts will, if passed, be the largest cuts in the country’s history. Surprisingly, there is much opposition to these cuts. In fact the opposition is so strong that passing the tax legislation will be very difficult. Today we will examine these cuts and determine if they are worthwhile. I will let you decide if this legislation is good for the American people. Let’s get started.
CORPORATE TAX CUTS
There is also a move by the government to have the American corporations return their profits earned back to the United States. Now, if a corporation that operates from the United States brings their world wide profits back to America, the government taxes these profits to such an extent that these corporations choose to leave these funds in new foreign corporate operations or protected in foreign accounts. If these funds were to arrive back on American shores, they would be invested in the United States where it would be used to create jobs and expand the U.S. economy.
The Democrats all proclaim that any tax cut for the corporations is a tax cut for the rich. They would rather see America stagnate than do something that might increase employment for the working class here at home. Not one Democrat in either the House of Representatives or the Senate voted to allow any American to receive a tax cut. Their attitude is the higher the taxes, the better.
I recently saw a union letter to their members telling them to contact Congress and tell their representatives that they want Congress to oppose the cuts. The union wants their members to tell Congress that they want higher taxes and want a less secure business climate. All of this is because the people who pay the most taxes will receive a tax break along with everyone else.
INDIVIDUAL TAX CUTS
Individuals will see tax cuts also. Under current law, taxes do not start until individuals earn $12,000. This number is raised to $24,000 in both of the proposed Congressional plans. That means that individuals who do not itemize deductions owe no tax on the first $24,000 they earn. The Republican House plan also does away with the Alternate Minimum Tax. Many small businesses pay their business taxes under the individual tax rates if they are not legally filing as corporations or partnerships. With changes in the Depreciation rules, these small businesses should see a tax reduction. The tax code will be simplified so most taxpayers should be able to file their taxes on a postcard. No more need for taxpayers to hire tax professionals to file their taxes.
The Democrats are opposed to these tax cuts because the largest benefit goes to those who pay the most taxes. Democrats are opposed to rewarding these high income earners.
The Democrats are opposed to all tax cuts. Through the country’s history, the only tax cuts proposed by a Democrat were the Kennedy tax cuts in the 1960’s and one signed by Bill Clinton after Hillary’s Health Care debacle. Clinton did not fight a Republican tax cut and signed the tax legislation. In both cases, Democrats in Congress opposed the legislation by large margins. The Republicans were needed to pass the bills both times.
Ronald Reagan and George W. Bush also had tax cuts. In all cases, when taxes were cut, the Federal Government saw their tax receipts increase because of the increase in economic activity.
The argument used by the Democrats is that cutting the taxes for the people who pay the most taxes is unfair to the poor, who pay little or no tax at all. There is really another reason why they oppose tax cuts. If the tax cuts take hold, and the economy acts the way it has with all past tax cuts, then the economy will take off and grow. When this happens, incomes of all Americans goes up, and Americans are happier. They feel more secure in their jobs, are able to save again for retirement, create a rainy day fund, fund their children’s education, and maybe go on that exotic vacation. If any of that happens, the Republicans will keep control of Congress and the White House. This is bad news for the Democrats. They would much rather have the country stagnate then have credit go to Republicans for a better country.
The Democrats also argue that the tax cuts will raise the Federal deficit. This only seems to bother Democrats when the Republicans are in power. During the Obama years in office, the government grew at a tremendous rate. Obama doubled the total debt since the founding of the country. Democrats had no problem with that. They only have a problem when Republicans work to allow taxpayers to keep more of their own money.
History has shown that each time taxes are cut, more money comes into the country through the tax system. This is because of the increase in economic activity. When people earn more, their taxes are higher, even though they keep more in their pockets. Everyone wins. Well, everyone wins except the Democrat politicians.