Presidential candidate Donald Trump unveiled his tax plan yesterday, and unlike his plan for immigration or anything else, it actually had quite a bit of detail. Unfortunately that detail was a combination of populous pandering and commandeered shop-worn ideas of recent conservative thought on the subject of taxes. So I am in the position that I disagree with the former of Mr. Trump's plan, and agree with the latter. In other words, it may surprise some of my regular readers, I find myself at least in partial agreement with Donald Trump.
I will engage in analysis on the dichotomy of my opinion on the Trump tax plan by first expanding on the parts of his plan with which I agree, and then follow it immediately with a counter part of his plan with which I disagree.
The lowering of the corporate tax rate from 35% to 15% is an idea that every Republican presidential candidate supports, and would indeed incentivize American business to remain in America and create American jobs. However, Mr. Trump's insistence on "punishing" business by taxing (read: tariffs) over-seas profits would mitigate the positive benefit of lowering the tax rate, and may quite possibly cause an economic downturn as the Smooth/Hawley legislation did that was signed by President Hoover in 1930.
The Trump tax plan calls for the reduction of tax brackets from the current 7 or 8 to just 4. This simplification of the tax code is again something that every Republican presidential candidate supports. However, the manner in which Mr. Trump revises the current tax system puts more of the tax burden on fewer tax payers in order to garner him populous appeal with the middle-class. Mr. Trump has suggested just the opposite of what will make this country economically strong, i.e. narrowing the tax base instead of widening it.
Under the Trump plan the top earners would pay a lower rate, but would pay a larger percentage of the total tax burden. Currently, about 38% of people pay no federal income tax at all, under the Trump plan that would increase to around 50%. This means that those who are paying taxes will necessarily shoulder more of the burden. And many of those are business owners who will be less likely to hire workers. Not to mention that every study that has been done on tax cuts clearly shows that cuts in the middle and the bottom have very little stimulating effect on the economy. Cuts at the top end, according to the studies, provide the biggest shot-in-the-arm to economic growth.
Mr. Trump does call for the repeal of the inheritance tax (death tax), but again, all conservatives, and most certainly all the Republican presidential candidates, are in favor of this. The Trump tax plan is designed more to garner support for the candidacy of Donald Trump than it is to implement a pro-growth, fair tax system that this country desperately needs. His plan perpetuates and augments the current system which has the top 5% of wage earners paying 70% of the federal taxes in this country. This is not only a dis-incentive to growth, but it is inherently unfair and not conservative. But then coming from a man who was a Democrat up until 10 minutes ago, I am not surprised.