FactPower: Facts, figures, and talking points for Resistance activists.
Trump’s Tax Plan and How It Would Affect You
Trump’s plan would eliminate:
Itemized deductions, except mortgage and charitable
Doubles the standard deduction for everyone – sounds good for a few years until the debt is higher than our national income
Estate tax and generation-skipping transfer tax. Helps top 1% of the population, only 4918 tax returns but they contribute 17Billion in taxes
Alternative Minimum Tax, helps those who make $54,300 single or $84,500 joint
Marriage Penalty in child care . . .
Head of household filing status. That would hurt single-parent families.
Trump’s plan would keep:
Inheritance tax for capital gains – means that children who inherit must hold on to the property, BUT, they can extract the value by using it as collateral. (Sounds like a way to build financial dynasties!)
Trump’s plan would increase:
Child Tax Credit by an unspecified amount
Trump’s Plan would decrease:
The deduction for non-child dependents, from $5000 to $500 for elder care
Effect on Business Taxes:
Trump’s Plan would lower:
Maximum corporate tax rate from 35% to 20%. -- that doesn't hurt large corporations. Most of them don't pay more than 15 percent. That's because they can afford tax attorneys who help them avoid paying higher taxes. Almost half of corporations pay no taxes since they pass them onto their shareholders.
Maximum tax rate for small businesses to 25%. That includes sole proprietorships, partnerships and S corporations. Many of those are real estate companies, hedge funds and private equity funds. As a result, 85 percent of the tax cut benefits the top 1 percent of earners. That's because most mom-and-pop small business don't earn enough to qualify for the top tax rate. That means they won't benefit from the cut.
Trump’s Plan would allow:
All businesses to expense the cost of depreciable assets instead of writing them off over years. It does not apply to structures. The write-off would encourage more investment.
Trump’s Plan would cause stock prices to fall:
C corporations would lose the ability to deduct interest expense. That would make it more expensive for financial firms to borrow money to lend and invest. Companies would be less likely to issue bonds and buy back their stock. That could cause stock prices to fall.
How the Tax Plan Affects You:
Increase the $20 trillion national debt by $7 trillion over the next 10 years. That accounts for any boost in growth. It also folds in the cumulative interest that would accrue from the debt.
The level of debt increase would dampen economic growth in the long run. A larger debt weakens the dollar and increases interest rates. That's because the debt is already more than the nation's annual economic output.
Would add 1.7 percent to growth in 2017, 1.1 percent in 2018 and 0.5 percent in 2019. That growth would add $53.1 billion in revenue in 2017. After that, it would add $34.9 billion in 2018 and $17.5 billion in 2019. But that's not enough to offset the revenue losses incurred by the cuts.
Would hurt parents of school-age children because they would lose the personal exemption for each child. That means almost 10 million parents would see their taxes increase.
Corporations don't add jobs to build products until they see demand for them. That's why it makes economic sense to give the biggest tax cuts to the poor and middle class. They are more likely to spend, resulting in increased demand, production, and hiring. In contrast, the wealthy use tax cuts to save or invest. That helps the stock market, but doesn't drive demand. Once there is demand, then businesses create jobs to meet it. That's how tax cuts ordinarily create jobs.
(October 16, 2016) (With thanks to Author Kimberly Amadeo, Oct 11, 2017, “US Economy”)