Leaked Tax Reform plan misses the boat completely since America is a consumer economy, not a manufacturing one
Earlier this afternoon Axios published what they called a ‘leaked’ outline of President Trump’s planned legislation for tax reform.¬† And of course both Republicans and Democrats in Congress responded with their tired old complaints about the rich not being taxed enough, and the deficit not allowing for large cuts.
However none of their arguments actually hold any water since the majority of big corporations hardly pay any taxes to begin with, and upwards of¬†45% of Americans don’t pay any taxes¬†anyway.
This of course leaves the Middle Class and small businesses stuck with paying much of the tax burden.¬† And when you look at how America’s economy is broken down today, the reality is that Congress should be cutting taxes on these individuals and entities by a good 75% or more since it is consumer spending, not industrial manufacturing, that makes up 90% of the economy.
Tax Reform Plan:
The plan was conceived by the “Big Six” Republicans, a group which includes House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury secretary Steven Mnuchin, White House economic adviser Gary Cohn, and the chairmen of the two tax-writing committees ‚ÄĒ Senate Finance Committee chairman Orrin Hatch and House Ways and Means chairman Kevin Brady.
Some further details, per Axios’ sources:
Top individual tax rate cut from 39.6 to 35. The current seven income tax brackets collapsed to three, as part of simplification. (Axios hasn’t obtained the other two rates.)
Axios can confirm that the Big Six agreed to cut the corporate tax rate from 35 percent to 20 percent. That key detail leaked last night to the Washington Post. (Trump has said he wants the corporate rate to be 15 percent.)
The Big Six framework is also expected to include guardrails to prevent wealthy people from artificially lowering their income taxes by rearranging their affairs to get taxed at the small business rate.
We can confirm, too, WashPo’s reporting that under the Big Six framework there’ll only be three individual income tax brackets rather than the current seven, and that Republicans plan to double the standard deduction ‚ÄĒ a boost for the middle class and a key component of simplification. –¬†Zerohedge
Ironically it has been the monetary policies of the Fed more than the fiscal policies out of Washington that have aided in severely lowering the standard of living for most Americans despite the push over the past few decades for increased taxes.¬† This is because price inflation has soared since 2000 when the central bank began manipulating interest rates and vastly increasing the money supply, which has now led Americans to be able to buy less products and services, but at much higher prices.
If President Trump truly wanted to help the American taxpayer he would need to sway Congress into repealing the Federal Reserve Act and return to Treasury controlled printed money.¬† However since it even appears unlikely that any real tax reform is going to be passed in the Congress before the 2018 elections anyway, most of this is little more than Kubuki Theater and fodder for officials to use for their benefit when next November comes around.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.