Trump’s Tax Plan: History, Winners, and Losers
By Ted Beust | Our Voice Contributor
Throughout most of American history, taxes for the wealthiest Americans and corporations have been over 60%. You had 94% under Franklin Delano Roosevelt, 91% under Dwight Eisenhower, 70% under Lyndon Johnson (actually John F. Kennedy’s idea), and 70% under Jimmy Carter. Since the 1908s, the top tax rate has been as low as 28% under Reagan and as high as 39.6% under Obama.
If you propose high rates such as most of the 20th century before the 1980s, you’d be labeled a socialist or communist by the GOP – also saying you’re punishing the one-percent for being successful.
In a few days, President Trump’s tax plan, the Tax Cuts & Jobs Act, will be enacted. Unlike former President Barack Obama’s tax plan, there will be four brackets instead of seven, making it a little simpler. The rates are 12, 25, 35, and 39.6%. The corporate tax rate and pass through businesses tax will be cut as well.
The winners and losers of the tax plan
Winners: Wealthy Americans and Businesses of All Sizes.
Despite the top tax rate being 39.6%, there has been a slight change in the income rate for it to be taxed at that rate. Under the current administration, the income rate will have to be over $480,000 for married couples. This is in contrast to the rate of $400,000 rate under the previous administration. So right off the bat it helps the wealthiest Americans.
This tax plan will also decrease the pass-through business tax and the corporate income tax rate. The corporate income tax rate will go from a 35% rate to a 20% rate. The pass-through business rate will now be 25%, vastly lower from the rate of 39.6%.
Losers: The middle class
Under TCJA, the middle class will have to pay a bottom rate of 12%, a two-percent increase from the previous rate of 10%. Thus resulting in a tax increase for middle income Americans. However, despite the child tax credit going from $1000 to $1600, the 12% rate vastly overshadows this credit.
So as one can see, the wealthy and big corporations will benefit from this plan, and the middle class will be squeezed. From the corporate tax rate going 35% to 20%, to the now 12% rate on the middle class, we can see this isn’t good for the middle class. The tax plan is also very, very unpopular, with an overall approval rating of 29% according to a recent poll from Quinnipiac University. The Republicans have been painted as the “Party of the rich,” and this tax plan only confirms that.