One of the key campaign issues for Donald Trump was overhauling the US Tax Code and cutting income taxes for millions of Americans. His plan was spelled out:
“The Goals Of Donald J. Trump’s Tax Plan
Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:
1- Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.
2- Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.
3- Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.
4- Doesn’t add to our debt and deficit, which are already too large.
The Trump Tax Plan Achieves These Goals
1- If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.
2- All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.
3- No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.
4- No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.”
More recently, as the White House has turned its attention from the failed replacement of Obamacare to the tax overhaul, Trumps aides have told the media that the President’s goal is to:
“…cut tax rates sharply enough to improve the economic picture in rural and industrial areas of the U.S”
Many critics, both Democrats and Republicans claim that there is no way Trump will be successful in keeping this promise. A couple weeks ago, the New York Times listed 5 reasons why overhauling the tax code will not be easy and likely to not be as successful as Trump promised it would be:
1- A leadership vacuum
2- Deficits and debts
3- Border tax showdown
4- Winners-and-losers effect
5- Rules, rules and more rules
Treasury Secretary Steven Mnuchin gave the White House an August deadline to have the tax overhaul completed and passed by Congress in order to implement it in time for filing taxes next year. Reports from the White House indicate that they have already been hitting some roadblocks and that meeting the August deadline may not be possible.
Several tax code revisions have been given to Trump and as yet, he has not commented any of them. It already appears that Trump is going to have to make some comprises concerning his tax overhaul goal stated during his campaign. The question everyone is asking but getting no answers is what compromises will Trump be willing to make and what issues will he take a hard line stand on?
The topic of overhauling the tax code is sure to heat up, especially in the media as we move into the hot days of summer.