By Gabrielle Seunagal
Once again President Trump proves that he is a man of his word. Earlier today, the leader of the free world announced a wonderful tax plan that will provide tremendous aid to individuals and small businesses alike. The new tax plan consists of the following: lower individual income tax rates, a reduction in business rates, one time tax on overseas profits, a new territorial tax system, tax break for child care costs, and the repeal of the Alternative Minimum Tax. The President’s new tax plan is in great alignment with his written proposals on tax reforms in his 2015 book ‘Crippled America: How to Make America Great Again’.
One of the best aspects of President Trump’s tax reform is the positive impact that it will have on small businesses. Under his tax reform, business tax rates will be reduced to 15% as opposed to the existing top rate of 35% for corporations and the 39.6% for owners of pass-through businesses. On page 153 of Crippled America, the President clearly says: “The plan states that any business of any size will pay no more than 15 percent of their business income in taxes.” On page 153 of the book, Mr. Trump further elaborates by explaining that a low tax rate nullifies the demand for corporate inversions, thus boosting the competitiveness of the American market.
Likewise, the President’s tax reform proposal will engender lower individual income tax rates by reducing the number of tax brackets from seven to three. The trio of new tax brackets will rest at 10%, 25%, and 30%, as opposed to the current seven brackets of 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. On page 153 of Crippled America, President Trump clearly expounds the merits of a tax bracket reduction. To quote him exactly: “This new code eliminates the marriage penalty and the Alternative Minimum Tax while providing the lowest tax rates since before World War II.” Taxes are the enemy of the American worker. Reducing them will greatly aid middle class Americans by allowing them to retain more of their hard earned income. As President Trump stated in Crippled America (pg 153), “With more money in the middle-class pockets, consumer spending will increase, college savings will grow, and personal debt will decline.” There are absolutely no downsides to lowering the tax brackets.
On page 156 of Crippled America, President Trump sheds light on the $2.5 trillion sitting overseas and belonging to American-owned corporations. He also states that a plethora of jobs could be created if corporations owners were to bring those funds back to America. The reason they fail to do this is attributed to the high U.S. tax rate, as opposed to lower rates in other countries. No business owner wants to spend more money than they have to. To fix this ailment, the President is now proposing a low and one-time tax on said profits. This course of action will incentivize American corporations to bring their money back to this nation, thus creating a myriad of jobs and boosting our economy.
A territorial tax system is an additional element of the Commander in Chief’s tax proposal. Instead of forcing American companies to pay taxes on all their foreign and domestic earnings, under the new tax code, these businesses will only owe taxes on their U.S. earnings. As President Trump states on page 155 of Crippled America, “our current tax code (actually) discourages business growth and penalizes success.” He makes a valid point. Excessive taxes will and have engendered business owners to transfer their earnings and companies overseas. Why should they keep their assets in America when they can store them outside of the country for less money? High taxes alienate job creators from wanting to do business in America. Job creators are the innovators and the backbone of the American economy.
Another additive of President Trump’s reform calls for a tax relief in relation to child care costs. First Daughter Ivanka Trump proudly advocated for during her father’s Presidential campaign. Child care is one of the highest income drainers, especially for middle class families. The President’s plan calls for a total of two tax breaks: one will permit parents to deduct the average cost of child care in their state, according to their child’s age. The second change will provide a tax break to people who budget out $2,000 annually to meet child care and elder care costs. The contributions will start off as tax deductible, but eventually become tax free.
From the start of President Trump’s campaign for office, he had a concrete plan on reducing taxes for the people of this nation. Now that delivery time finally arrived, he has provided what he promised, which is documented in the parallels between Crippled America, Chapter 16: A Tax Code That Works and his newly announced tax reform proposals. Reducing taxes on businesses, and American workers/profits will stimulate the economy and engender the creation of millions new jobs. The current tax code punishes success and estranges the entrepreneurs, innovators, and magnates of America.