Monday, August 8, 2016

Trump's tweaked tax plan means higher IRS bills ... sort of, when compared to his original proposal

Donald J. Trump has rewritten a lot of rules so far this presidential election season. Today, however, he learned one of the old ones when it comes to taxes. Sometimes you have to compromise. Donald J. Trump, the 2016 Republican presidential nominee, presents his economic policies and revised tax plan to the Detroit Economic Club on Monday, Aug. 8, 2016. Click image to watch the C-SPAN video of the full speech. Zero tax rate zeroed out: In a speech today at a packed Detroit Economic Club, the Republican presidential nominee presented a glimpse of his economic plan, including some changes to his tax proposals. The Donald promised back in September 2015 when he was battling 16 other GOP White House hopefuls that folks making $25,000 or less would have a 0 percent tax rate if he got into the Oval Office. Now there’s no more zero. Trump’s first tax reform take: In his original tax plan, Trump proposed no taxes on folks making $25,000 or less. This 0 percent tax bracket was accompanied by three other tax rates, 15 percent, 20 percent and 25 percent. The table below shows the income ranges that Trump Tax Plan I would have covered. Income Tax Rate Single Taxpayers’ Income Married Jointly Filing Taxpayers’ Income Head of Household Taxpayers’ Income 0% up to $25,000 up to $50,000 up to $37,500 10% $25,001 to $50,000 $50,001 to $100,000 $37,501 to $75,000 20% $50,001 to $150,000 $100,001 to $300,000 $75,001 to $225,000 25% $150,001 and up $300,001 and up $225,001 and up   Now, however, Trump has been forced decided to go along with the House Republicans’ tax reform plan released in June. Fewer brackets, higher rates: The GOP document, officially titled “A Better Way: Our Vision for a Confident America,” calls for just three tax brackets, but they mean more taxes for the lowest and highest earners. The House plan, or Trump Tax Plan II as I’m calling it, has rates of 12 percent, 25 percent and 33 percent. The table below breaks down the income levels, using 2016 inflation adjusted tax brackets now in effect. Income Tax Rate Single Taxpayers’ Income Married Jointly Filing Taxpayers’ Income Head of Household Taxpayers’ Income 12% up to $37,650 up to $75,300 up to $50,400 25% $37,651 to $190,150 $75,301 to $231,450 $50,401 to $210,800 33% $190,151 and up $231,451 and up $210,801 and up   House Republicans swear that their plan’s larger standard deduction would mean that most Americans in the 12 percent bracket would still pay no taxes. But most is not the all that The Donald had proposed. The taxpayers at the other end of the income tax spectrum also will pay more under Trump Tax Plan II with its top tax rate of 33 percent, or six percentage points greater than his initial proposal. But they shouldn’t complain. A top tax rate of 33 percent is still substantially less than the 39.6 percent they pay now on ordinary income. Political expediency: So why did Trump change his tax plan? Two reasons. First, from a political standpoint Trump consolidates his Party unity message by acquiescing to the House’s tax plan, which has House Speaker Paul D. Ryan’s fingerprints all over it. Ryan, as the GOP’s budget guru, wrote many similar fiscal tomes when he was chairman of the House Budget Committee. And he served as chair of the tax-writing Ways and Means panel before accepting the Speaker’s gavel. Trump, by indicating his support today of the House tax plan, doubles down on his support of Ryan, whom he finally officially endorsed over the weekend in his GOP Congressional district primary fight. Fiscal pressure, two: Then there are the dollars lost. Trump Tax Plan I would cost the U.S. Treasury around $10 trillion over 10 years according to most estimates, including on the Republican side. Some put the decade-long deficit cost at $12 trillion. But Trump Tax Plan II, which no doubt was tweaked at the urging of his new economic advisers (including six Steves and no women…), will cut that deficit amount to $3 trillion when dynamic scoring is used. This an economic calculation method that takes into account projected economic growth that tax and other policy changes will produce. So far, we don’t have details on the tax plan and other issues Trump touched on in today’s remarks. His campaign says that will be coming to the website soon. Until then, though, we’re stuck with the frequent Trump admonition “believe me” when it comes to how his revised tax and economic proposals will make, again Trump’s word, America win, and win bigly/big league. You also might find these items of interest: The IRS audits presidential tax returns every single year Dueling tax calculators face off over presidential candidate tax proposal costs, benefits Billionaires back Hillary Clinton despite the Democratic Party support of higher taxes for the wealthy

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Trump’s tweaked tax plan means higher IRS bills … sort of, when compared to his original proposal

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