Here's a breakdown by Karoli Kuns at Crooks & Liars about what the Republican "wealth- fare" proposal would do:
1. Drop the number of personal tax brackets from seven to three: 12%, 25% and 35%... [T]his is "smoke and mirrors" because it doesn't effect prosperity, which is the justification Trump and the Billionaires use for tax cuts.... [F]ewer people will pay the highest rate, but they'll raise the lowest rate so that more people are paying more taxes. Socialize the cost; privatize the profit. It's how Republicans roll.
2. Double the standard deduction to $12,000 for individuals, $24,000 for married couples. This is how they get around raising the lowest rate from 9.7% to 12%. It also supposedly gets rid of the marriage penalty and raises the tax credit for having lots of children, along with granting a whopping $500 tax credit for non-child dependents.
3. Repeal the estate tax - We all know who derives benefit from this.
4. Repeal the alternative minimum tax instead of fixing the indexing so that it doesn't catch middle-income earners in its grasp. Most people don't pay this. If it were properly indexed, it would tax high earners at a rate more appropriate for people who already have too much money.
5. Drop the corporate tax rate to 20% which Trump claims is what he wanted all along, not 15% like he's been insisting upon.
6. Drop the rate on "pass-through" (Subchapter S) corporations to 25%. Republicans swear this will help the mythical "small businesses" which are being terribly hammered by the higher tax rate, but the average income pass-through on these entities is $750,000. They don't need a tax break. They need to pay more.Oh, and it would balloon the deficit by trillions of dollars, something Republicans only care about when a Democrat is in the White House.
The New York Times editorial board has more detail on the Republicans' "boondoggle masquerading as tax reform:"
After months of secret negotiations, the Trump administration and congressional leaders have come up with a tax plan — sort of. What they have really come up with is a wish list of tax cuts for the wealthy, with lots of “we’ll get back to you on that” promises where the details are supposed to be.
This much is clear: The tax “framework” published by Republican leaders on Wednesday would greatly increase the federal deficit, would not turbocharge economic growth and could leave many middle-class families worse off by ending deductions they rely on. It would do little or nothing to improve the lot of the working class, a group President Trump says he is fighting for. It would instead provide a windfall to hedge fund managers, corporate executives, real estate developers and other members of the 1 percent. And can it be just a happy coincidence that Mr. Trump and his family would benefit “bigly” from this plan? [snip]
It’s hard to predict the economic impact of these skeletal proposals. But most experts agree that they could raise the federal budget deficit by trillions of dollars. As they have so many times in the past, Republicans will surely argue that the cuts would spur growth, and, in some measure, pay for themselves. This is the old supply-side hooey. In fact, over time the increased borrowing for unproductive tax cuts could depress growth by driving up interest rates.
There are important public purposes that could justify increasing the deficit — repairing the country’s dilapidated infrastructure, for instance, or paying for hurricane recovery efforts. Making the rich richer is not one of them.(The editorial contains some useful graphics on historic marginal tax rates and the Alternative Minimum Tax - please check out the entire op/ ed.)
Once again, as with their Obamacare repeal efforts, Republicans don't seem to care about what the people want, or know that the public is on to them:
Cutting corporate taxes looks like a hard sell for Donald Trump and Republican Party leaders -- a new ABC News/Washington Post poll shows that 65 percent of Americans feel large corporations pay too little in taxes.
Given what the public knows about it, they opposes Trump’s tax plan by 44-28 percent, with a substantial 28 percent undecided. Half of those polled expect the administration’s plan to reduce taxes on the wealthy, while just 10 percent think it’ll reduce taxes on the middle class. A quarter expect equal treatment.We'll have more as this "boondoggle masquerading as tax reform" gets fleshed out. But we'll leave you with an editorial cartoon we posted a few days ago that sums it up now and forever:
(click on image to enlarge)
(Tom Toles, Washington Post)
