Rich Americans and business owners have delayed paying their taxes because they are waiting for the promised Trump tax cuts. Bloomberg asks if this could this force the Republican-majority Congress to raise the debt ceiling? Treasury Secretary Steven Mnuchin is expected to ask Congress to raise the debt ceiling before they recess in August. If we thought that Congress could not figure out healthcare, could talk of raising the debt ceiling become even more controversial? How did we get to this spot?
There is a new trend of wealthy Americans who are not paying all of their taxes. This is a trend that began right after the election of Donald Trump. This allows the wealthy to delay paying taxes on “non-wage earnings.” This could include capital gains. Instead, Lucy Dadayan explains, the wealthy have “large incentives to shift non-wage taxable income from 2016 to 2017.” The senior researcher at the Rockefeller Institute of Government explains that this is a legal move, allowed in the tax code.
The New Haven Courant spoke to Senate President Pro Ten Martin Looney, who explained that just a few people are making a huge impact, causing government headaches.
“We think the primary reason is that since November, wealthy people whose income is primarily from investments are counting on President Trump to deliver a reduction in the federal tax on capital gains income and they are holding onto their stocks and not selling. They’re holding on because they’re anticipating paying less federal tax when the law changes…. I think that’s a major part of it — the strategy of investors and what they expect federal changes to be.”
While he was on the campaign trail, Trump promised that he would give a fabulous tax cut to Americans, focusing especially on the wealthy. Trump also promised he would slash business taxes from 35 percent to only 15 percent.
Yet, even though he offered the cuts, there appears to be issues with how this cut is going to be paid. Some surmise that this is why there has been such a push to reform healthcare so early in his presidency.
Right now, dismantling ACA, the Affordable Care Act, often called Obamacare, has been where the president wants to get the money for the tax cut.
The new Republican Congress bill eliminates nearly all of the taxes that the ACA was given to subsidize payment of health insurance. In the ACA, anyone earning over $200,000 ($250,000 for married couples) paid more money to help subsidize the insurance.
The new plan also includes a reduced payment of Medicaid. NPR explains that the program, as written in the new bill, would take Medicaid from an entitlement program to a grant program. This potentially limits the spending on the patient and puts pressure on states, giving them substantially less money for the patients. Right now, the House Republican bill is going nowhere fast in the Senate.
Senate Majority Leader, Mitch McConnell spoke to Reuters explaining that there are just not enough votes to pass. The Republican from Kentucky doesn’t see passage happening and does not even want to offer speculation but did mention that the Senate may write their own bill.
“I don’t know how we get to 50 [votes] at the moment. But that is the goal. And exactly what the composition of that [bill] is I’m not going to speculate about because it serves no purpose.”
When asked about the tax overhaul, McConnell was more optimistic, stating that the chances are “pretty good,” and pointed out that “not in my view quite as challenging as healthcare.” Yet, he did not offer where they were going to get the money for a tax cut, especially as the government is nearly out of money.
Just last week, the government had $177 billion dollars in the cash account. Yet, the wealthy, as well as businesses, are not paying their fair share of taxes because they are awaiting their promised tax cut.
The Denver Post interviewed Brent Lipschultz, a PwC partner, who stated that “clients do not want to overpay.” He explained that their wish is “to pay the government less now, knowing that they could be paying a lot less in the future.”
There is no doubt that there will soon be a new debate on the debt ceiling. Yet, there appears to be great expectation on the tax cut. Constituents are talking publicly about the cuts. Previously, Inquisitr reported that Pawn Stars reality star, Rick Harrison, who owns the World Famous Gold and Silver Pawn Shop near downtown Las Vegas stumped for Trump. Now, after the election, he is still a fan and his bottom line is why.
— FOX Business (@FoxBusiness) May 19, 2017
The normally Libertarian voter was recently on Fox Business, and he stated that he was waiting and eager for his tax cut, yet did not share if he was delaying any payment of his personal or business taxes with the audience watching the program.
Meanwhile, the New York Times has reported that the I.R.S. has now hired debt collectors to chase down any errant taxpayers. Unlike the IRS, debt collectors can hound those who owe money by mail and by telephone.
The paper points out that one of the companies hired by the I.R.S., Pioneer Credit Recovery, already had some issues with previous Education Department debt collections. The subsidy of Navient was accused by the department of “misleading” borrowers and for “unacceptably high rates.”
Debt collectors have been approved by both sides of the aisle. Republican Charles Grassley explained that it is only fair.
“Collecting tax debt that’s due and not in dispute is a matter of fairness to the many taxpayers who pay what they owe.”
Surely, the Iowa Senator should have many agreeing with him. But, some may want to ask, why are many of the wealthiest Americans and businesses not paying their fair share of taxes and causing such a serious dent in the country’s bankbook, thus forcing the House to consider raising the debt ceiling?
Do you think that Congress needs to raise the debt ceiling in order to give tax cuts to wealthier Americans and business owners? Or do you believe that the trickle down method is effective? Share your views and opinions below, and let the debate begin!
[Featured Image by Chung Sung-Jun/Getty Images]