By Jack Kelly:
Since most everyone reading our newsletter has a job or wants a job, has some money or hopes to have money, it makes sense to understand what the tax plan hoopla is all about.
Who better to tell you then a recruiter-business owner-lousy writer who can’t balance a checkbook?
US companies currently pay a corporate tax rate of 35%. This is the highest in the world until you factor in their hiding money abroad in other countries and hiring armies of nerdy tax accountants and feisty lawyers figuring out loopholes that would throw the rest of us in jail.
Trump and Goldman wants to reduce the tax rate down to 15%.
The prevailing theory behind reducing taxes is that the more money that both companies and individuals have in their pockets by not paying the government will be spent and thereby stimulate business growth. For example, a drop from 35% to 15% in real dollar terms could result in companies having multimillions of dollars at their disposal. The corporations could then spend the windfall on building new factories, starting new business lines, hiring more people, and buying other companies. The tax break would also encourage businesses to bring back money that is now held abroad.
Yes, I know what you are thinking, the CEOs and executives could also spend it on themselves. Sorry, stuff like that will always happen.
Trump and the Goldman gang say that the tax cut will “pay for itself” through increased economic growth which may ultimately spur even more tax revenue. Treasury Secretary Steve Mnuchin, a former investment banker, has said the tax changes will act as a stimulus that will lead to economic growth of 3 percent.
The Tax Policy Center, a nonpartisan organization (do we really believe anyone is nonpartisan anymore?), estimated that collections would fall $6.2 trillion over a decade. The organization also said it would add $7.2 trillion to the debt. Obviously, they are a bunch of killjoys.
The plan also includes benefits for the average person. The plan would simplify matters and create just three tax brackets, with a top rate of 35%, down from 39.5%. The US currently has seven tax brackets.
Trump also wants to repeal the tax on inheritances, not so subtly referred to as the “death tax” and other measures to help decrease the tax burden on individuals. Similar to companies, if a person has more money in their pocket as opposed to sending it to the government to waste, she/he could use the extra money to invest, save, buy a new home or car, take a vacation or purchase other goods and services. Multiply this out by the entire population and the extra money circulating in the economy should have a meaningful effect of growing the economy and creating new jobs. .
We are far from finished and still do not have all the details yet. The president signed an order last week that requires Treasury Secretary Steve Mnuchin to report on ways to simplify the tax within 60 days, with a final report due in 150 days.
This may surprise you but the mass media and Congress are already ripping the plan apart. Why you may ask? It seems like the media and Congress now prefer to fight, yell, scream, cry and whine rather than work together and actually try to make something positive happen for us.
Although I may come across cynical and sarcastic, it seems that a real thoughtful tax cut will do wonders for the economy and job market.
The post Everything you need to know about the Exciting and Stimulating new Tax plan but too Scared to ask appeared first on Compliancex.
April 28, 2017 at 01:17AM
from The Compliance Exchange
No comments:
Post a Comment