aside “We The People” Must Be Vigilant v Any Of President-Elect’s Sleight Of Hand, Part II (Taxes)

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The republican President-elect Donald Trump has promised his followers that he would not take any action to harm American workers. Many of us who did not vote for him intend to hold him accountable for keeping his commitments to those who supported him.

This includes the concept that any future tax reforms should be targeted to mostly benefit the middle class and those living in poverty versus the top 1% who have already been amply rewarded over the past couple decades with huge increases in their salaries. bonuses, perks, stock options etc to where top executives earn at a minimum of up to 100 times what the average front line employees make.

It is no wonder that there are angry workers out their who are demanding real reform.Related image

Unfortunately, the republican President-elect Donald Trump current tax reform plan favors mostly those at the top 1% of the income bracket.

The 11/13/16 NPR  article by John Ydstie, “Who-Benefits-from-Donald-Trumps-Tax-Plan,” details who are the beneficiaries of his tax reform proposal:

“Donald Trump has proposed a very detailed tax plan — but his statements on the campaign trail don’t always match what his proposal would really do.”

“For instance, at a rally in Scranton, Pa., Trump promised to “massively cut taxes for the middle class, the forgotten people, the forgotten men and women of this country, who built our country.” During a town hall meeting on NBC’s Today show, he said he believes in raising taxes on the wealthy.”Image result for photo trump

“And at least half of Trump’s supporters agreed with him on that, according to a pre-election survey by RAND Corp., a research group.”

“Just before the election, after the last debate, 51 percent of them intending to vote for Trump supported increasing taxes on high-earning individuals,” says Michael Pollard of RAND.”

“But Trump’s plan does the opposite, says Lily Batchelder, a law professor at New York University and visiting fellow at the Tax Policy Center.” 

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BANNON-SESSIONS-FLYNN

“If you look at the most wealthy, the top 1 percent would get about half of the benefits of his tax cuts, and a millionaire, for example, would get an average tax cut of $317,000,” she says.”

Under Trump, Fewer Tax Brackets

Donald Trump proposes having three tax brackets, down from the current seven, and repealing the head-of-household tax-filing category. The standard deduction would be $30,000 for married couples filing jointly (up from $12,600 currently) and $15,000 for single individuals (up from $6,300).

Trump’s Plan

TAX BRACKET
SINGLE
HEAD OF HOUSEHOLD
MARRIED FILING JOINTLY
12% $0 – 37,500 N/A (single-filer rates) $0 – 75,000
25% $37,500 – 112,500 N/A (single-filer rates) $75,000 – 225,000
33% $112,500+ N/A (single-filer rates) $225,000+

Current Plan

TAX BRACKET
SINGLE
HEAD OF HOUSEHOLD
MARRIED FILING JOINTLY
10% $0 – 9,275 $0 – 13,250 $0 – 18,550
15% $9,275 – 37,650 $13,250 – 50,400 $18,550 – 75,300
25% $37,650 – 91,150 $50,400 – 130,150 $75,300 – 151,900
28% $91,150 – 190,150 $130,150 – 210,800 $151,900 – 231,450
33% $190,150 – 413,350 $210,800 – 413,350 $231,450 – 413,350
35% $413,350 – 415,050 $413,350 – 441,000 $413,350 – 466,950
40% $415,050+ $441,000+ $466,950+

“But a family earning between $40,000 and $50,000 a year would get a tax cut of only $560, she says, and millions of middle-class working families will see their tax bills rise under Trump’s plan — especially single-parent families.”Image result for photo trump

“A single parent who’s earning $75,000 and has two school-age children, they would face a tax increase of over $2,400,” Batchelder says. That’s if they had no child-care deductions; the increase in taxes comes partly because the Trump plan eliminates the $4,000 exemption for each person in a household.”

“Steve Calk, a Trump economic adviser, says the loss of the exemption is partially offset by other changes in Trump’s plan. He takes issue with the Tax Policy Center’s analysis and argues that there will be big tax cuts for middle-income families.”Image result for photo trump

“Take a family earning $50,000 a year, Calk says, “and their child-care costs are $7,000 or $8,000 a year. They’re going to save 35 percent on their net tax bracket.”

“(Lily) Batchelder says that calculation is misleading because it focuses on tax rate reduction rather than a family’s after-tax income — in other words, how much money they have in their pocket after taxes.”

“But Calk argues the personal-income tax cuts, as well as the Trump proposal to reduce the corporate tax rate from 35 percent to 15 percent, will help taxpayers by boosting economic growth.”Image result for photo trump

“The single best way to help people that are in the low-income bracket or unemployed or underemployed is, No. 1, to get them employed in real jobs with real benefits,” Calk says.”

“Economists disagree on whether the tax plan would be good for the economy. The Tax Policy Center says that over the first decade, the government would lose $6.2 trillion in revenue, producing huge budget deficits that could hurt the economy.”

One other element of the Trump plan is worth noting: It would eliminate the federal estate tax entirely. Only the wealthiest taxpayers — less than 1 percent — now pay that tax. Ending it would lead to an even greater concentration of wealth in the U.S.

The 9/15/16 Forbes article by Ryan Ellis lists the positive and negative points of the Trump Tax Plan (The complete text is footnoted below):

“First, the good. The plan reduces the number of individual tax brackets from seven to three, in the process cutting the top marginal income tax rate from 39.6 percent to 33 percent. The corporate income tax rate is reduced from 35 percent to 15 percent. The dreaded alternative minimum tax (AMT) is repealed. For families, there is a generous standard deduction, a de facto bigger child deduction, and a very broad 12 percent introductory tax rate on the first $75,000 of taxable income.”

The following data is from the Tax Policy Center’s website:

What is the AMT?

 

The individual alternative minimum tax (AMT) operates alongside the regular income tax. It requires many taxpayers to calculate their liability twice—once under the rules for the regular income tax and once under the AMT rules—and then pay the higher amount. Originally intended to prevent perceived abuses by a handful of the very rich, it now affects over 4 million filers.

 

Related Article:

Top Five Problems with the Trump Tax Plan – Forbes www.forbes.com/sites/ryanellis/2016/09/…/top-five-problems-with-the-trumptax-plan…Sep 15, 2016

 

21 comments

  1. Oh please, let’s put the blame where the blame is due. American workers are all for TRUMP and upset and “angry” because of Obamas policies and taxes. It is a little too early to comment on taxation before he has even taken office. Geez.

    • Dear Once Written,

      This is DT’s own tax plan which he announced with a lot of public fanfare. His words is what I heard with my own ears. At some point, it is only reasonable to hold DT accountable for his own words, speeches and tweets.

      Again we will have to agree to disagree.

      With Warmest Wishes, Gronda

        • Dear Once Written,

          There are parts of DT’s tax plan that are liked by those on both sides of the aisle.

          But then there are different parts that both republicans and democrats don’t like. Most economists on both sides of the aisle do not like the price tag. It is estimated by credible independent sources, that this tax cut could increase the U.S. deficit by over 5 trillion dollars.

          With Warmest Wishes, Gronda

        • Dear Once Written,

          It is too simplistic to make a carte blanche statement that HRC’s plan is a lot worse without specifics.

          Here are 4 ref. which I have read to help make a comparison based on some factual basis:

          1.)Donald Trump Tax Plan Would Add to Debt and Hillary Clinton’s …
          http://www.nytimes.com/2016/10/12/us/politics/donald-trump-taxes-hillary-clinton.html Oct 11, 2016 – WASHINGTON — The stark choice that Hillary Clinton and Donald J. Trump pose for voters goes as well for their revised tax plans: Mr. Trump would simplify the tax code but cut taxes mainly for the rich and add trillions of dollars to the federal debt, while Mrs. Clinton would do the opposite, an independent analysis …

          2.)It’s Clinton Versus Trump: A Comparison Of The Final Two Tax Plans http://www.forbes.com/…/its-clinton-versus-trump-a-comparison-of-the-final-two-tax-plans/Jun 8, 2016 –

          3.)How do Clinton and Trump’s Tax Plans Compare? | Tax Foundation
          taxfoundation.org/blog/how-do-clinton-and-trumps-tax-plans-compare Oct 18, 2016 –

          4.) Who would win and lose under Donald Trump and Hillary Clinton’s tax …
          https://www.washingtonpost.com/…/who-would-win-and-lose-under-donald-trump-and-…Oct 14, 2016 –

          With Warmest Wishes, Gronda

        • OK, let’s simplify this a little. So you think 45% is not enough tax for the rich and they shouldn’t get some kind of tax break? You say that the tax code under Trump benefits the top 1%. What if the shoe was on the other foot? Just think , if you made a million dollars, you would be giving $450,000 back to the government in taxation. How could that not be enough. Let’s get real. I love it when everyone’s an expert on this, but the tax code generally hasn’t changed in years. I , for one, believe that the rich are already paying too much. Do you realize that the majority of Americans don’t even pay any tax at all? The tax code is designed to give the upper income earners some type of tax incentive and tax break, if you want to call it that. I still think equal taxation it what our fore-fathers intended. The current tax code is not designed that way.

        • Dear Once Written, It is times like this that I like to refer to the Warren Buffet’s rule:The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay. Warren Buffett has famously stated that he pays a lower tax rate than his secretary, but as this report documents this situation is not uncommon. This situation is the result of decades of the tax system being tilted in favor of high-income households at the expense of the middle class. Not only is this unfair, it can also be economically inefficient by providing opportunities for tax planning and distorting decisions. The President hasproposed the Buffett Rule as a basic rule of tax fairness that should be met in tax reform. To achieve this principle, the President has proposed that no millionaire pay less than 30 percent of their income in taxes.

          Why the Buffett Rule Is Needed
           The average tax rate paid by the very highest-income Americans has fallen to nearly the lowest rate in over 50 years. The wealthiest 1-in-1,000 taxpayers pay barely a quarter of theirincome in Federal income and payroll taxes today—half of what they would have contributed in 1960. And, the top 400 richest Americans—all making over $110 million—paid only 18 percent of their income in income taxes in 2008.

           Average tax rates for the highest income Americans have plummeted even as their incomes have skyrocketed. Since 1979 the average after-tax income of the very wealthiest Americans –the top 1 percent – has risen nearly four-fold. Over the same period, the middle sixty percent of Americans saw their incomes rise just 40 percent. The typical CEO who used to earn about
          30 times more than his or her worker now earns 110 times more.

          Some of the richest Americans pay extraordinarily low tax rates—as they hire lawyers and accountants to take particular advantage of loopholes and tax expenditures. The average tax rate masks the fact that some high-income Americans pay near their statutory tax rate, while others take advantage of tax expenditures and loopholes to pay extraordinarily low rates—and
          it is these high-income taxpayers that the Buffett rule is meant to address .

          Of millionaires in 2009, a full 22,000 households making more than $1 million annually paid less than 15 percent of their income in income taxes — and 1,470 managed to have paid no federal income taxes on their million-plus-dollar incomes, according to IRS data.

          Of the 400 highest income Americans, one out of every three in this group of the most financially fortunate Americans paid less than 15 percent of their income in income taxes in 2008.

           Many high-income Americans are paying less in taxes than middle class Americans in taxes. Nearly one-quarter of all millionaires (about 55,000 taxpayers) face a tax rate that is lower than more than millions of middle-income taxpayers. This is fundamentally unfair.

          The source for the above info is:(PDF) The Buffett Rule: A Basic Principle of Tax Fairness – The White House
          https://www.whitehouse.gov/sites/default/files/Buffett_Rule_Report_Final.pdf
          To achieve this, the President has proposed that no millionaire pay less than 30 percent of their income in taxes. This is the “Buffett Rule.” As Warren Buffett has pointed out, his effective tax rate is lower than his secretary’s—and that is wrong.

          With Warmest Wishes, Gronda

    • Dear Once Written,

      Read the Forbes analysis. Ryan Ellis is conservative. Here’s a WSJ (conservative paper) source that you can use as a reference:Taxes Under Trump: Almost Everyone Pays Less and the Richest Pay a Lot Less
      Wall Street Journal‎ – 12/2/16

      With Warmest Wishes, Gronda

      • The rich have always been given a bad wrap. They are less than 1 % of the nation. Let’s give tax breaks where it’s needed, to the poor and middle class. I would rather see a flat tax where everyone pays equal percentage. 17% would be just about right.

        • Dear Once Written,

          It would be a plus to have billionaires like DT pay the 17% versus endorsing loopholes that have allowed him to pay -0- in federal income taxes for the past several years.

          With Warmest Wishes, Gronda

  2. OK, if you are going to bring up that card. Trump has paid more in business taxes, employment taxes than most people in this country. We are talking millions of dollars a year in these taxes. He used the federal income tax code just like Warren Buffet and others to avoid paying federal income taxes due to losses, which are typical in the business industry. I took losses many years from the stock market for the same reasons. Please, no one can ever say that Trump was a tax dodger or didn’t pay enough taxes. I think your post is premature. Right now, anyone criticizing Trump is wasting their breath.

    • Dear Once Written,

      The fact is that DT has not paid any federal income taxes in years and this is by his own admission.

      Here is the source that I have relied on regarding DT not paying IRS federal income taxes:Donald Trump Used Legally Dubious Method to Avoid Paying Taxes …www.nytimes.com/2016/11/01/us/politics/donald-trump-tax.html
      Oct 31, 2016 –

      With Warmest Wishes, Gronda

    • Dear Once Written,

      If you only listen to the voices and read those posts which are in agreement with your viewpoint, then you will be limited only to that viewpoint. I subscribe to and read papers which represent both points of view. I listen to FOX TV as well as NPR, C-Span, CNN etc.

      I have noticed that you don’t mention your sources for information which would be helpful.

      With Warmest Wishes, Gronda

      • I too listen and read, but not really Fox. However, most of the news media has been biased towards Trump, so I do think it is one-sided and not objective enough.

        • Dear Once Written,

          I am one of those frequent letter writers to editors for not being more thorough in their research and for not providing sufficient context for many of their stories.

          Frankly, the media establishment folks have a lot of egg on their faces for getting just about everything wrong during this 2016 election process.

          With Warmest Wishes, Gronda

  3. Gronda good post. I wish the main stream media had highlighted the comparative tax plans of the two candidates more. The nonpartisanTax Foundation models Trump’s most recent tax plan as increasing the $19 trillion debt by over $5.3 trillion during the next ten years. His first plan was modeled at over $11 trillion, so he pulled back from that. Clinton’s plan would increase the debt by about $200 billion over the same period, not in the right direction either, but 1/27 as much an increase. And, several economic modeling firms, two of which are Oxford Economics and Moody Analytics, rate Trump’s economic plan from creating a malaise to recession and Clinton’s from neutral to positive. I like citing Oxford, as they are based in England and offer an outside looking in perspective.

    In short, I am all for my more jobs, but we need to be very careful with global retrenchment, as what creates jobs is not business leaders, it is customers. A CFO said in the book “The Rich and the Rest of Us,” if a company could get by without hiring any workers, it would. So, while we should look to grow jobs, what has cost us more of them is technological improvements which will continue. We are producing far more manufacturing in America than in the 1980s, but with few workers.

    I hope he is successful on this front, but I feel we are in for a roller coaster ride over the next four years. I worry about the debt and the environment most under this President.

    Again, good post, Keith

    • Dear Keith,

      The irony is that when it comes to tax reform and creation of additional good paying jobs, that DT will get ample support from the democrats. My concern is also about increasing the U.S debt to a level where any tax reforms and the updating of our infrastructure, end up being a drag on the economy.

      Promising folks the mfg jobs of the past is a con. But focusing on new ideas, technologies, etc. can provide great paying new jobs. This is especially true when it comes to facing up to climate change issues.

      CIAO, GRONDA

      • Gronda, well said. I have said before, any one can get elected promising a tax cut. Unfortunately, we need some adult conversation about our debt and not just spending cuts, as they will not get us there, unless we gut things like defense, social security and Medicare. I agree about the con part. Whether people like Bernie Sanders or not, he was the only candidate who stood up in front of coal miners and told them the truth – their jobs are not coming back and he had proposed an idea to help them. Keith

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