Trump’s tax plan could have rich New Yorkers fleeing for Florida
President Trump has signed three executive orders to spark reviews of tax and financial regulations so taxes on businesses and individuals can be cut.
The approach would be different from Trump’s earlier plan, which was criticized as an approach that would mostly benefit higher earners.
Michael Zezas, a strategist at Morgan Stanley, also said he doubted the corporate rate would be anywhere close to Trump’s proposed level.
The rate reduction that the president is backing could cost the federal government $2.4 trillion over a decade, say independent budget experts. “That’s our objective”, Mnuchin said. “You know, I think people are spending too much time wasting, wasting time on that issue”.
Most tax deductions are going away.
Any changes to the tax laws would have to be backed by Congress. But all other deductions, except for mortgage interest and charitable contributions, would be eliminated, including state and local taxes and medical expenses.
The increased opportunities for tax avoidance will arise because the Trump proposal would enormously widen the now small difference between the tax rate on corporate profits-35 percent-and the top personal income tax rate of 39.6 percent.
“So as to not seem completely venal, [the Trump team] served up a few goodies for the average wage-earning family, among them fewer and lower tax brackets and a higher standard deduction”, the NYT editorial board wrote.
He later went on to tell ABC’s “Good Morning America” that Trump’s tax plan isn’t about Trump’s returns, it’s about the American public’s returns.
But critics saw the plan as a giveaway to corporations and a tax cut that will likely benefit the rich, while removing a deduction that property owners have come to depend on. Under the Trump plan, the corporate rate would be 15 percent and the top personal income tax rate will be 35 percent. The administration contends that the cuts would generate enough economic growth to compensate for lost tax revenue – an argument that is disputed by most economists.
The principles of his tax plan – presented Wednesday in a one-page document – offered enough detail to suggest that Trump’s preferred tax changes will add a ton to deficits.
But recently Ireland has come under fire from the European Union for arrangements that allowed Apple to dodge more than $14 billion in taxes, and the country was ranked the 6th worst tax haven in the world by Oxfam in a report late previous year. “They lie not with the working people who elected him, but with the plutocracy that envelops him”.
Individual income taxes, meanwhile, would be simplified.
Overall, Marr notes the Tax Policy Center has estimated the top 1% of households would see a 14% increase in after-tax income, while low and middle-class Americans would see gains of just 1.2% to 1.8%.
