Steven
Mnuchin said that the republican tax bill will raise taxes on people who are
earning more than $1 million and providing a tax break to everyone else. These
benefits will go to lower and middle-income people, yet even the rich will find
benefits. The Treasury Secretary stated the bill will “simplify taxes and level
the playing field”.
This plan includes
eliminating the deduction for state and local taxes. This eliminated tax
deduction will negatively impact the taxpayers in high-tax states. The people
who have less income than $1 million in high-tax states are still expected to
receive a tax cut from the bill. Business
owners who pay more taxes will get benefits from the reduction of business tax
which will especially benefit New York. This benefit is a pass-through
reduction which will also help small, medium- size business and entrepreneurs.
This bill will lower the corporate tax levy from 35% to 20%.
However,
many studies have disagreed with Munchin’s valuation. The Tax Policy center
said by 2025 that most of the benefits would accumulate to the top 1% and that
upper-middle class payers will see higher taxes and lower income levels would
receive only modest benefits. The GOP tax writers claim that this tax cut will
generate growth and allow companies to hire more workers at higher wages.
Opponents
state that this will tax more of the middle-class people which might make them
consume less because they have less disposable income. The bill lowers business
taxes so that businesses are more likely to invest. This break is expected to
lead to saving so that business will start to invest more, meaning that
interest rates will go down. This will also make the grants for graduate
student’s income, which will then be taxed on. This bill is trying to cut
taxes for people and give benefits to others, but it may only be making it worse.
The House bill will have to be reconciled to the bill to be passed in the
Senate which might change the analysis for the middle and lower income tax
payer.
In our country, the saying "the rich get richer, and the poor get poorer" is very true. Forcing "Million dollar earners" to pay higher taxes in order to provide benefits to the lower and middle class is odd to me. We are making people who have earned, whether past generations of their family of themselves, to basically hand money those who have not earned it.
ReplyDeleteSad to see that the only way to help small/medium business and provide tax breaks to the less wealthy is to make such a policy that still benefits the rich. This sort of policy is tricky and comes down to deciding whether one party takes disadvantage or the other party gains an advantage.
ReplyDeleteIncreases taxes on education..or even taxing education at all, is going to negatively affect our stock of human capital. And human capital is such a precious resource for growth. So I think that part of the reform is a huge mistake.
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