Are Corporate Tax Rates too High in the United States?
Trump’s new tax plan focuses on slashing the corporate tax rate, and the already discredited theory of trickle down economics. It offers more huge tax cuts for the top 1%, and little for the other 99% unless you believe in the theory of trickle down economics. Tax payers in the lower income range would see an income increase of around 2%; Tax payers in the middle income range would see an income increase of around 8%; and tax payers in the top 1% range would see their incomes rise by a whopping 20%, according to the Tax Foundation. The childcare deduction is only useful for those who itemize their deductions. In fact it is not his plan at all. The campaign deleted their tax plan from the campaign website. Trump’s new proposal is straight from the House Republicans’ already published agenda.
So much for the “outsider” campaign and no more business as usual. The last time a Republican president implemented these same economic and regulatory policies they resulted in the great recession of 2008. It meets none of the criteria of Reaganomics. Reagan insisted all cuts be paid for with cuts in spending. He also insisted that tax cuts not change the share of taxes paid by each tax bracket. Trump’s plan is not paid for. He has proposed trillions of in new spending on his wall, deporting 11 million immigrants, and new infrastructure spending.
The proposed tax cuts will also shift the tax burden, as almost all the cuts benefit only those in the top tax brackets, and corporations. Trump supporters may think the 8% raise in their income is still good. With $10 trillion less coming into federal coffers over the next decade, federal money going to the states will be drastically reduced. This means higher local taxes to pay for education and roads. That means more money out of your pocket to subsidize the bulk of the lost revenue which went to corporations and the top 1%, not you.
The highest corporate tax claim deceives the public with what is a fact, but completely misleading without the rest of the facts. Yes, the United States has the highest corporate tax rate among industrialized countries. But it actually has one of the lowest rates when you look at what US businesses pay in taxes after deductions, exemptions and tax credits. On average, the effective corporate tax rate is 12.6% and each year two-thirds of US corporation have zero tax liability. The effective corporate tax rate in the United States is 16th among industrialized countries. Trump’s tax plan slashes the corporate rate from 35% to 15%, but only eliminates a few credits and deductions. The reason the Republicans keep trying to lower the rate is not because they think 35% is too high. They think the current 12.6% average currently paid is too high, but can’t say it out loud.
The United States offers more deductions to corporations than any other country in the world. Both Democrats and Republicans have been paying back their large donors through tax policy for years. Next time another politician says there is no evidence of quid pro quo when it comes to big money in politics, just ask him to explain a tax code that includes millions in tax credits for the oil industry and lower effective tax rates for the wealthy than the working class. This is the reason Trump won’t show his taxes. At best he has been paying the average of around 12%, lower than his secretary. More likely he has been paying 0% like two-thirds of US corporations do each year.
Trump’s new tax plan has huge cuts for corporations and the top earners. Not just rate reductions, but by eliminating taxes completely. Eliminating the death tax applies only to those with assets of more than $10.86 million per married couple. It is hard to understand how this relates to his stump speech rhetoric about looking out for the middle class. In addition, he wants to roll back regulations and get rid of the Consumer Protection Agency. Trump previously promised to eliminate the Carried Interest Deduction. This loophole allows investors to treat earnings as investment income and thus pay a lower rate of income tax. Instead, his newly revealed plan increases the deduction by lowering the rate they have to pay even further.
While Trump and the Republicans pay lip-service concern to the growing wealth gap, they actively try to increase it. Trump has decided the only path to victory is by dumping the working class voters who won him the nomination. He has joined the establishment, adopted their tax plan, and endorsed their candidates. To access their big donors and special interest groups he has offered them billions in tax cuts. The self-financing outsider has just sold out and become the Republican establishment candidate. Trump is gambling that his base will put their hatred of Muslims, immigrants and minorities before their own financial interests.