Reports indicate President Trump’s administration recently unveiled its first official proposal for tax reform, and, while specific details on several aspects of the plan are still cloudy, one thing is certain – it relies heavily on tax cuts for the wealthy. Per a report by the Huffington Post, the tax plan- touted as the “biggest tax reform in over 30 years,” outlines at least three distinct perks for those making seven figures and above.
The first perk involves the elimination of the inheritance tax (or the “death tax,” as it’s known in many wealthy conservative circles). The tax, which essentially charges heirs and heiresses of considerable fortunes a 16.6 percent tax rate when they decide to claim funds from the family coffers, currently brings in almost $275 billion for the federal government every decade.
Perk number two involves repealing the current 3.8 percent tax rate on stocks and bonds. This mandate was created and enforced by the Obama administration, though it only affects those making over $200,000 a year. According to sources, households with a reported income of over $700,000 annually would save roughly $25,000 from the termination of the mandate under Trump’s new tax plan.
The last perk directly affects large, privately held corporations, but will more than likely be beneficial for the 1 percent as well. Trump’s plan proposes that the corporate tax rate be lowered from 35 percent to 15 percent – a 20 percent decrease that will cost the government over $2 trillion but will save the 93 percent of wealthy households that own at least $10,000 of stock a small fortune.
Other proposals from Trump’s tax plan include possibly “simplifying” what is now seven tax brackets to just three. While the president’s administration didn’t exactly specify which income levels would be directly affected, experts analyze that changing the number of tax brackets will almost certainly benefit those with the most to lose otherwise. Reports indicate Trump is also calling for the repeal of the “alternative minimum tax“- a supplemental income tax that is used for organizations or peoples that, for whatever reason, may have exemptions from standard taxes. The tax usually requires individuals that qualify – primarily the wealthy – to calculate their tax liability under rules for both traditional and alternative minimum taxes and then pay the higher of the two. Initially designed to prevent taxpayers with a large amount of disposable income from using loopholes to evade taxes, repealing it will no doubt cater to the economically elite.
Reports via CNN indicate that the president’s tax plan, though still in its rudimentary stages, will more than likely be met with skepticism from lawmakers and politicians alike even though Republicans constitute the majority of Congress. In fact, many representatives have already stated that the proposed policies highlighted in the initial presentation of the plan leave far too many questions unanswered, and others feel none of the changes will make a serious contribution to true tax reform.
Many of the gaping holes in the plan stem from “specifics” that are entirely too vague to fully interpret. Along with the lack of distinction in terms of the potential income levels that will be affected by condensing the tax brackets, the simple fact that the administration has offered no hard timeline for the process has led many to question if the entire plan has been completely dredged out. An outline for what seems to be tax breaks for child care coverage sounds promising, but details for this, too, have been hard to come by.
According to Gary Cohn, Trump’s top economic adviser, the tax plan unveiled today has been designed to cater specifically to “low and middle income families” but both critics and analysts alike argue that most of the policies presented seem to directly service America’s wealthiest citizens.
As President Trump and his team continue to flesh out the details of the proposal, experts predict that, unless there’s a dramatic change, America’s 99 percent shouldn’t expect additional provisions in the plan to accommodate them.
[Featured Image by Carolyn Kaster/AP Images]