Trump tax plan the right stuff
Still needs tweaking
THE Trump administration finally released its anxiously awaited new tax plan last week. There is much to like in it — and there are clearly some areas that need improvement.
I actually view it as a two-plan system, one for corporations and one for the rest of us. Together, they need to perform an economic dance without stepping on each other’s toes in order to jazz the economy.
Clearly a departure from the Obama tax policy, it’s a very strong starting point, even though there are a few moves to work out.
For the most part, the proposal is built on what I’ll call “the right stuff.” Our corporate rates are way too high and have not been competitive for years — add that to excessive red-tape regulation, and you end up with economic quicksand.
Since we have stagnant wages at every level of the economy, cutting Uncle Sam’s bloated slice from individuals is the most direct way to give Americans a raise and increase consumer spending.
Which leads me to one of my biggest issues with the generally well-structured plan: Washington should not and cannot successfully play social justice warrior with tax policy.
It doesn’t work. Just look at the previous eight stagnant years. So, on the individual taxpayer side, there should not be winners and losers — only winners.
The degree of the tax-cut winnings is the art, but the science says don’t reward some and punish others due to various levels of workplace success. Every American taxpayer should pay less, period.
On the corporate side, it’s tougher. Rates have to be cut substantially from the current noncompetitive 35 percent. The vast majority of major developed countries have rates between 20 percent and 25 percent.
President Trump’s proposal of 20 percent is fair and very competitive, albeit aggressive, as it’s below the global average of 22.5 percent.
The president’s tax plan, with much input from economic adviser Gary Cohn, is about the future, and putting the cash saved to use in America is still worth the trade-off.
But it should come with some strings, such as new hiring prom- ises or an agreed-upon cap on stock buybacks. Plus a percentage of those specific dollars should be used for raises for all employees.
On the individual side, while the new rates are excellent, I don’t think the “fourth” rate for top earners is fair, nor a particularly “American” option. That’s because we are all Americans and we all should get a benefit from tax cuts. Besides, $200,000 in New York is worth a lot less than $200,000 in Nevada or Texas or Iowa.
Which brings me to deductibility for state and local taxes. This must be maintained, as it helps equalize the innate misspending of certain states that begin with “New.”
The tax code reform shouldn’t punish people because of where they live. And, let’s face it, what is middle class in NYC is wealthy in Missouri and Kansas.
The estate tax repeal is the art of the deal giveback.
I’m glad the president had the foresight to put this in his plan — it actually shows his unselfishness. By design, he’ll take the incoming fire from the left and then he’ll cede the repeal and give the other side a victory, too.
For the good of the country and the forgotten middle class, the White House will likely negotiate a bump in the minimum estate value taxable from $5.49 million to $10 million to $20 million.
The whole point of tax cuts and tax reform is to increase the amount of money in everyone’s paycheck.
This plan, with a few adjustments, has the right stuff to upsize American paychecks.