Wednesday, April 26, 2017

The Trump Tax plan and what it means

We do not have a lot of details yet as the entire plan seems to be one paper.
I am all for simplyfing the tax code and cleaning up the deductions seems to make sense.
Lowering the top tax rate to 35% from 39% is ok as well.
The trouble is that many of the wealthy including President Trump will be paying less than that because of the pass through loophole.
I have two core issues with this plan.
A) It is designed to beneift the very wealthy.  Under the plan they will pay less than most middle income Americans.  That does not seem fair to me.
B) The massive taxcuts along with extra spending will skyrocket the national debt.  What Republicans claim is that by giving tax breaks to corporations they will invest more money so the economy will grow.  This is wrong and history has proven its wrong Under President Reagan and President Bush.
Supply side economics just does not work this way.  What we need is increased  consumer spending.
As more people buy stuff companies make more money so they need to buy more raw materials and hire more people.  Those people than have more money to spend and things just keep getting better.
This is why whenever a state raises the minimum wage the local economy grows and even though businesses are paying more for employees they still make more profits.  Because people with money will spend it and the more people have more money the more spending you see.

The solution is really really simple and obvious.

Lets say you lower taxes to save one million.
One person who saves a million will invest most of and possibly buy a few luxury goods.
Give that same tax break to 1000 people who save $1000 each and they will hopefully use some of it to save or pay bills but they are far more likely to spend a significant amount of that.
Even better that money is spread around among many restaurants, stores, maybe cars or vacations, etc.

No comments:

Post a Comment