Economy

Tax reform at last

Tax reform at last”

Republicans say their plan will create a simpler, fairer code, with business rates in line with other countries. "We will deliver on this promise and our bill will improve the lives of all Americans". 1986 is calling, and wants its rotary phone back.

If it's done wrong, tax reform can leave us with years of slower growth under the weight of crushing debt, the ongoing transfer of wealth from the young-and-poor to old-and-rich, and the threat of future tax increases to meet spending and debt obligations.

"Our country and our economy can not take off like they should unless we dramatically reform America's outdated, complex, and extremely burdensome tax code", Trump said this week.

"After a decade of lost growth, hardworking American families know the status quo is unacceptable".

Are US taxes more complicated than in other places?

At least three GOP House members from NY and New Jersey issued statements of concern about the plan to roll back the state-and-local-tax deduction. Millennials might have an undeserved reputation for being easily frightened, but there's no doubt that the current tax code induces unnecessary stress.

What was introduced this week in a speech by the president and in separate announcements from Republican congressional leaders was what they all termed the "Unified Tax Reform Framework" - emphasis on the "framework" part. President Trump and I are standing up for you.

The framework eliminates many itemized deductions, but would retain incentives for home mortgage interest, cheritable contributions, work, higher education and retirement security.

A win on taxes would surely salvage Trump's reputation as a deal-maker.

Congressional tax writers said they were confident the promise of increased economic growth and lower overall rates would keep Republicans united as the committees start hacking away at various provisions.

Farm Bureau President Zippy Duvall said, in a statement, that AFBF was encouraged by the inclusion of lower tax rates for individuals who own businesses, elimination of the death tax, and some business interest deductibility. Importantly, the plan goes a long way toward fixing our business tax system, which makes it hard for US businesses to invest in new equipment and new factories. Shouldn't our tax code support the growth of small businesses? The move to a territorial tax system, where a company is taxed only in the jurisdiction where it generates earnings, from a worldwide tax system like in the United States, where USA companies are taxed on their US earnings and the foreign earnings that they repatriate, is a dramatic change to the tax system and arguably could bog down tax reform discussions when members of Congress probably want something done by the 2018 midterm elections.

We must also recognize that America has become uncompetitive on the global stage.

Lower Tax Rate on S-Corps and Pass-Through Companies: The plan calls for a top rate of 25% for small businesses and, importantly, urges Congress to include provisions to prevent high-worth taxpayers from attempting to re-characterize individual income to unfairly take advantage of this small business tax reform. "If you're a business that's creating manufacturing jobs, you will get the benefit of that rate because that is income that will be passed through to help create jobs and better wages". Cutting the rate makes economic sense, and the new plan proposes a corporate tax rate of 20 percent. "I look forward to working with my colleagues in achieving this historic opportunity to create a fairer, simpler, less burdensome tax code for the American people". It will deliver fiscally responsible tax reform by broadening the tax base, closing loopholes and growing the economy.

The analysis comes just days after Republicans unveiled their blueprint for the sweeping overhaul, which they call the "Unified Framework for Fixing Our Broken Tax Code".

Studies show that almost 3.5 million manufacturing jobs will need to be filled over the next decade, but approximately 2 million of those jobs will go unfilled due to a skilled labor shortage. Congress would also have the power to impose an additional tax surcharge on the wealthiest individuals.



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