WASHINGTON – An outline of President Donald Trump and congressional Republicans’ tax plan was released Wednesday, and the coverage of it has been less than honest.
A New York Times article, republish in the Minneapolis Star Tribune, criticizes the plan for not doing enough for poor people.
“The plan would not benefit lower-income households that do not pay federal income taxes,” reads the article.
This statement is inherently true of any tax plan. Of course people who pay no taxes currently will not start paying less taxes.
In fact, any claim along the lines suggesting the GOP plan does little to nothing to help the poor is incorrect for a number of reasons. While it is true that the contraction of tax brackets from seven divisions to three divisions brings the lowest tax bracket up from 10 percent to 12, there are a number of things on this GOP wishlist that would likely increase the number of people who pay no taxes at all. In addition, there are also clear advantages for people in the middle income brackets.
To start with, the standard deductions for both individuals and married couples nearly doubles. While currently those levels are at $6,350 for singles and $12,700 for married couples, the GOP plan calls for levels of $12,000 and $24,000 respectively. That means people will not pay any taxes on the first $12,000 they earn, a huge increase from current standards.
Furthermore the Child Tax Credit would be expanded to apply to more people. Currently once a family reaches a certain income, they can no longer claim the Child Tax Credit. Trump’s proposal calls for a significant increase in the maximum amount of income a family can take before this credit is no longer applicable.
This is significant in two ways. First, it saves families money that can then be spent improving their children’s quality of life directly. Secondly, it significantly reduces the financial disincentive regarding marriage. Parents would be more free to be married, both working, and provide a more stable home life for their children, without fear of financial government penalties come tax time.
Many other deductions and tax loopholes would be repealed, but the plan calls for a number of important ones to remain in place. Tax benefits that encourage work, higher education, and personal retirements savings would remain. Deductions for mortgage interest and charitable contributions would also remain.
Moreover small businesses would see a huge relief if Congress’ tax committees were to follow this framework. Small and family owned businesses would see their maximum total tax rate capped at 25 percent.
The plan would also attempt to prevent corporations from storing assets overseas by targeting a new taxation of foreign profits of American based international companies.
This framework is only supposed to serve as a starting point. It is not the final plan, and it is far from a law, or even a bill. In the end it could look much different, but the principles contained within it are solid, and should help Americans across all walks of life.