Tax Reform Bill Giving a Helping Hand to the 1%
WASHINGTON D.C. - With more details of the new tax code revealed Wednesday, questions of who is going to benefit from it and who is going to oppose it are starting to arise.
One thing to get out of the way is the tax code is old, really old. The tax code hasn’t been updated since 1986, thus why Republicans are in a frenzy to get their tax reform bill passed. Another reason is due to their repeated failed attempts of rewriting the health care bill. Republicans are now focusing on passing the tax reform bill to show any achievement because nothing major has been done in congress since the Trump administration went into office eight months ago. On Wednesday, congress revealed a 9 page high-level framework of the tax reform bill.
The framework would repeal state and local tax deductions as well as any relating to investment interest, gambling losses and business expenses that have not been reimbursed. In order to stimulate economic growth, the framework would drop top rate on the owner’s business income from 40% to 25%. However, there are many snags in the tax reform bill that many people are opposing.
The first snag is tax breaks for the 1%, despite Trump’s claim that this tax reform bill is aimed solely to cut taxes for middle class working families and not benefit any wealthy ones. According to a new analysis by a leading group of nonpartisan tax experts, 80 percent of tax benefits would occur to those in the 1 percent. Any household making more than 900,000 a year would see their taxes drop by more than $200,000. Compared to households that make between $150,000 and $300,000, a majority would see a tax increase.
The reason for the prediction of middle class families seeing an increase in taxes is due to the loss of itemized deductions, particularly the ability to deduct state and local property taxes and income.
There have been conflicting statements from the White House about the impact of tax cuts on the 1 percent. Trump has said they would receive no benefit, while National Economic Council Director Gary Cohn has said it is irrelevant whether they benefit, because all taxpayers should benefit. Meanwhile, details about the bill predict the wealthy would benefit but they shouldn't benefit no more than anyone else.
That being said, this prediction could change due to Republicans not filling out any key details of their bill like what tax rate will be levied against specific income levels. Trump left many of these issue up to congress to decide. Because of this, congress don’t intend to produce a detailed plan of the tax reform bill for weeks due to it’s complexity.
On Sunday, Senator Bernie Sanders called Trump tax reform plan “the Robin Hood principle in reverse.” Sanders exclaimed,” ’Oh, this doesn't benefit the wealthy,’ is absolutely outrageous. Of course it benefits the wealthy. And of course it benefits large multinational corporations.”
