I just read a column by someone at US News billed as Assistant Managing Editor For Opinion in which the GOP tax plan is discussed. As you would expect from opinion at US News, the article slams the GOP proposal. It's tax cuts for the rich, don't you know. There's no need for tax cuts to expand the economy because things are already so good, don't you know. Corporations with more money won't invest; that only happens when there are new customers, or so the claim goes.
It got me to thinking. How does the tax plan benefit the rich. The highest tax bracket stays the same. It is true that it starts at a different level, so there could be as much as a tax reduction from this cause of $15,000 for a really rich person making over one million dollars per year. But remember, that same person also pays state and local income taxes in most places. If the rate is only 6% for state and local income taxes, that means that $60,000 is no longer deductible. That change by itself means that the tax bill for that person will go up about $24,000. If the rich taxpayer lives in a mansion that cost five million bucks and has a major mortgage on it, a big chunk of the interest on that mortgage will no longer be deductible either. That means taxes go up. Indeed, by getting rid of most deductions, it is the wealthy who will suffer the cost. Those in the middle income area will have the loss of deductions made up for by the increase in the standard deduction. Sure, some people may not be able to deduct $3000 in student loan interest, but if the standard deduction goes up by $12,000 they benefit by much more.
As for the economy, US News now thinks things are great? Under Obama we went 8 years with substandard economic growth. Wages and salaries stagnated. Huge numbers of people dropped out of the labor market (which is why the unemployment rate is so low.) Wouldn't everyone be better off if the economy could just grow by 4% or even 5% than the 2.2% that was the Obama norm? It would mean millions more jobs and much higher wages. And by the way, higher wages also means higher incomes. That means more consumption which is the same as the "more customers" the US News says are needed to motivate investment.
The truth is that the tax cut will speed economic growth to a great extent. That will benefit everyone in America. It won't just benefit the rich; everyone will come out ahead.
I don't get why outlets like US News feel that they have to opposed the idea of faster economic growth because it is being proposed by Republicans. Don't these people care about what happens to the average American? I guess not. Inside the Democrat/media bubble, everything is politics all the time.
It got me to thinking. How does the tax plan benefit the rich. The highest tax bracket stays the same. It is true that it starts at a different level, so there could be as much as a tax reduction from this cause of $15,000 for a really rich person making over one million dollars per year. But remember, that same person also pays state and local income taxes in most places. If the rate is only 6% for state and local income taxes, that means that $60,000 is no longer deductible. That change by itself means that the tax bill for that person will go up about $24,000. If the rich taxpayer lives in a mansion that cost five million bucks and has a major mortgage on it, a big chunk of the interest on that mortgage will no longer be deductible either. That means taxes go up. Indeed, by getting rid of most deductions, it is the wealthy who will suffer the cost. Those in the middle income area will have the loss of deductions made up for by the increase in the standard deduction. Sure, some people may not be able to deduct $3000 in student loan interest, but if the standard deduction goes up by $12,000 they benefit by much more.
As for the economy, US News now thinks things are great? Under Obama we went 8 years with substandard economic growth. Wages and salaries stagnated. Huge numbers of people dropped out of the labor market (which is why the unemployment rate is so low.) Wouldn't everyone be better off if the economy could just grow by 4% or even 5% than the 2.2% that was the Obama norm? It would mean millions more jobs and much higher wages. And by the way, higher wages also means higher incomes. That means more consumption which is the same as the "more customers" the US News says are needed to motivate investment.
The truth is that the tax cut will speed economic growth to a great extent. That will benefit everyone in America. It won't just benefit the rich; everyone will come out ahead.
I don't get why outlets like US News feel that they have to opposed the idea of faster economic growth because it is being proposed by Republicans. Don't these people care about what happens to the average American? I guess not. Inside the Democrat/media bubble, everything is politics all the time.
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