“I was the president who urged [the corporate tax rate] to be raised to 35 percent, but when I did it, it was precisely in the middle of OECD countries. It isn’t anymore. I think it should be lowered. This is just me now. I’m not speaking for,” he said, trailing off without clarifying for whom he was not speaking. Anyone want to guess who that was? It was President Bill Clinton in 2016 during his wife’s campaign. At the time, the I’m With Her 2016 campaign was wanting to raise or at least maintain the higher tax rate. I give you the Bill Clinton quote to remind you that much of the upcoming Republican tax reform is not a complete conservative hijacking of the system, but instead a more pragmatic approach, which could do a lot of good for the country.
With the new tax brackets being released, one of the biggest cuts would be the corporate tax rate dropping from 35 percent to 20 percent, as well as the estate tax being eliminated in six years. These would be positive changes for our country in so many ways. First off, it will force corporations to give back through job creation, either in infrastructure or employment. What tax breaks can create are the opportunity and lack of excuse to expand, and companies will have 15 percent more of their revenue to play with. I’m not a fool; I’m sure there will be wage raises at the upper levels, but even then, when the rich spend, that helps the economy too. The world is not ideal, but these changes can help with economic growth and inspire future entrepreneurs to take advantage of lower taxation.
And for the record, the estate tax, aka death tax, was never moral to begin with. Investor’s Business Daily argued in 2010, “People should not be punished because they work hard, become successful and want to pass on the fruits of their labor, or even their ancestors’ labor, to their children. As has been said, families shouldn’t be required to visit the undertaker and the tax collector on the same day.”
While the corporate end is getting a new deal, the average family and single person might be getting a better deal than they currently have had. Here is a breakdown by percent brackets: 12, 25, 35, 39.6.
The 12 percent bracket: This rate applies to single filers starting at $12,000 up to $45,000. For married joint filers, this applies after the $24,000 deduction up to $90,000.
The 25 percent rate: This begins at $45,000 for single filers and $90,000 for joint filers who are married.
The 35 percent rate: Single filers reach this bracket at $200,000. This rate applies to married filers at $260,000.
The 39.6 percent: This rate applies at $500,000 for singles and $1 million for married couples.
There is a lot to like about this new proposal. The simplicity of the tax structure is inspiring. Married people making under $90,000 are given a great tax rate that will help with home purchasing, retirement and disposable income. While, in California, $90,000 can be a stretch to live on for a married couple with kids, in the mid-west, this could create many new opportunities.
The rest of the brackets for joint married couples will be livable tax rates, and while President Donald Trump probably didn’t have much of a hand in the making of this, Paul Ryan and Mitch McConnell can pat themselves on the back for not exploiting the poor, but keeping working adults in the mix of paying for services they use. When people don’t pay, they don’t respect. That’s pretty simple.
I will add, as a single person, the $45,001-$200,000 rate of 25 percent is too large a bracket. This is the bracket I fall into, but I’m on the lower end. I wouldn’t have minded a $45,001-$100,000 20 percent bracket, but overall, I know I’ll make more and will be fine in the long haul.
Trump’s presidency has a lot of black eyes and bruises, but this tax reform could be one success that lives up to making America great. And I think Bill Clinton would agree too.