President Donald Trump delivered his first State of the Union address on Tuesday night. Experts from The Heritage Foundation weighed in with responses on various policy fronts. Here’s what they had to say.
Economy
Tax Reform Is Delivering Results
President Trump is right. The Tax Cuts and Jobs Act is providing tremendous relief for the American people.
Within less than a month of the bill signing, over 260 businesses across all industries announced raises, bonuses, and new investments directly benefiting over 3 million Americans. Next month, almost every American worker will have a larger paycheck thanks to tax reform.
Tax reform is expected to result in hundreds of thousands of new jobs and wage increases for American workers of all income levels. Down from 35 percent—one of the highest in the world—the U.S. now has a globally competitive corporate tax rate of 21 percent, which will lead to even more jobs, higher salaries, and increased economic opportunities for Americans for years to come.
However, there is still work to be done. Many of the individual and business tax cuts expire before 2026, providing an opportunity for big government to raise taxes rather than cut spending. Congress and the president must work to make the tax cuts permanent for American taxpayers.
Most Americans Will Receive a Tax Cut
Most Americans now have lower tax rates, allowing them to save more and invest in their family’s futures. President Trump highlighted a typical family making $75,000. They will see their tax bill cut in half.
To illustrate the size of the tax cuts, meet the Joneses. They have three kids and a mortgage. As a sales rep and a part-time nurse, they currently earn $75,000 a year. Under the new bill, they can keep an extra $2,000 of their hard-earned money to invest in their children’s future.
Their neighbor Tom Wong is a teacher earning $50,000. About 10 percent of that currently goes to taxes, but under the new bill, he can expect a $1,100 savings. More than 80 percent of Americans receive a tax cut.
The Fernandez family, who run a family-owned blinds and shades business, will also get a tax cut. This year, their hard work paid off and their company earned $250,000. Now, they can invest an extra $13,000 in growing their business. They can also raise wages and give out bonuses to their employees instead of handing the money over to the government.
When Washington takes less of the American people’s money, everyone wins.
Small Business Deduction Should Be Replaced With Lower Rates
President Trump highlighted the new 20 percent pass-through business deduction, one of the few parts of the Tax Cuts and Jobs Act that should not be extended.
Small and pass-through businesses that pay their taxes as individuals and face the new lower individual tax rates will receive a newly created deduction.
Although lower marginal tax rates for small and pass-through businesses are an important component of economic growth, the newly created discrepancy in top rates between individual income and small and pass-through business income will increase the incentives to treat income from wages artificially as business income.
This new tax privilege has no consistent policy rationale, arbitrarily favors certain types of businesses over others, introduces new complexity, and will provide new opportunities for unproductive tax planning. When the business deduction expires in 2025, Congress should not extend it and instead focus on further lowering individual tax rates to treat all income sources equally.
– Adam Michel, policy analyst, Thomas A. Roe Institute for Economic Policy Studies
Tangible Effects of the Tax Law
The president talked about how the Tax Cuts and Jobs Act will soon result in higher paychecks for the overwhelming majority of American workers.
In fact, some have already experienced a significant change in their after-tax pay. That is because the Tax Cuts and Jobs Act’s lower rates and a higher child tax credit will provide higher disposable incomes. (See these examples of how the revised tax system will affect different workers’ and retirees’ annual incomes after taxes.)
Simpler Taxes for Individuals
The president emphasized how the Tax Cuts and Jobs Act will help ordinary, working-class Americans. In addition to higher take-home pay, the new tax law will also simplify taxes for tens of millions of Americans.
By replacing some existing deductions and exemptions with a higher standard deduction and lower tax rates, many workers will spend less time keeping track of tax records and filing their tax returns. They may even be able to save the cost of paying an accountant to help with their taxes.
We estimated that the Tax Cuts and Jobs Act will cut the number of taxpayers who itemize by more than half, saving between 21 and 28 million Americans the hassle of keeping track of and itemizing their deductions.
No More Individual Mandate Tax
As the president highlighted, the Tax Cuts and Jobs Act got rid of a tax that fell most heavily on individuals and families making less than $50,000 per year.
Eliminating the Obamacare individual mandate will reduce the tax bills of many individuals and families—based on their own choices—by hundreds, if not thousands, of dollars. And most importantly...
Tax Reform Is Delivering Results
President Trump is right. The Tax Cuts and Jobs Act is providing tremendous relief for the American people.
Within less than a month of the bill signing, over 260 businesses across all industries announced raises, bonuses, and new investments directly benefiting over 3 million Americans. Next month, almost every American worker will have a larger paycheck thanks to tax reform.
Tax reform is expected to result in hundreds of thousands of new jobs and wage increases for American workers of all income levels. Down from 35 percent—one of the highest in the world—the U.S. now has a globally competitive corporate tax rate of 21 percent, which will lead to even more jobs, higher salaries, and increased economic opportunities for Americans for years to come.
However, there is still work to be done. Many of the individual and business tax cuts expire before 2026, providing an opportunity for big government to raise taxes rather than cut spending. Congress and the president must work to make the tax cuts permanent for American taxpayers.
Most Americans Will Receive a Tax Cut
Most Americans now have lower tax rates, allowing them to save more and invest in their family’s futures. President Trump highlighted a typical family making $75,000. They will see their tax bill cut in half.
To illustrate the size of the tax cuts, meet the Joneses. They have three kids and a mortgage. As a sales rep and a part-time nurse, they currently earn $75,000 a year. Under the new bill, they can keep an extra $2,000 of their hard-earned money to invest in their children’s future.
Their neighbor Tom Wong is a teacher earning $50,000. About 10 percent of that currently goes to taxes, but under the new bill, he can expect a $1,100 savings. More than 80 percent of Americans receive a tax cut.
The Fernandez family, who run a family-owned blinds and shades business, will also get a tax cut. This year, their hard work paid off and their company earned $250,000. Now, they can invest an extra $13,000 in growing their business. They can also raise wages and give out bonuses to their employees instead of handing the money over to the government.
When Washington takes less of the American people’s money, everyone wins.
Small Business Deduction Should Be Replaced With Lower Rates
President Trump highlighted the new 20 percent pass-through business deduction, one of the few parts of the Tax Cuts and Jobs Act that should not be extended.
Small and pass-through businesses that pay their taxes as individuals and face the new lower individual tax rates will receive a newly created deduction.
Although lower marginal tax rates for small and pass-through businesses are an important component of economic growth, the newly created discrepancy in top rates between individual income and small and pass-through business income will increase the incentives to treat income from wages artificially as business income.
This new tax privilege has no consistent policy rationale, arbitrarily favors certain types of businesses over others, introduces new complexity, and will provide new opportunities for unproductive tax planning. When the business deduction expires in 2025, Congress should not extend it and instead focus on further lowering individual tax rates to treat all income sources equally.
– Adam Michel, policy analyst, Thomas A. Roe Institute for Economic Policy Studies
Tangible Effects of the Tax Law
The president talked about how the Tax Cuts and Jobs Act will soon result in higher paychecks for the overwhelming majority of American workers.
In fact, some have already experienced a significant change in their after-tax pay. That is because the Tax Cuts and Jobs Act’s lower rates and a higher child tax credit will provide higher disposable incomes. (See these examples of how the revised tax system will affect different workers’ and retirees’ annual incomes after taxes.)
Simpler Taxes for Individuals
The president emphasized how the Tax Cuts and Jobs Act will help ordinary, working-class Americans. In addition to higher take-home pay, the new tax law will also simplify taxes for tens of millions of Americans.
By replacing some existing deductions and exemptions with a higher standard deduction and lower tax rates, many workers will spend less time keeping track of tax records and filing their tax returns. They may even be able to save the cost of paying an accountant to help with their taxes.
We estimated that the Tax Cuts and Jobs Act will cut the number of taxpayers who itemize by more than half, saving between 21 and 28 million Americans the hassle of keeping track of and itemizing their deductions.
No More Individual Mandate Tax
As the president highlighted, the Tax Cuts and Jobs Act got rid of a tax that fell most heavily on individuals and families making less than $50,000 per year.
Eliminating the Obamacare individual mandate will reduce the tax bills of many individuals and families—based on their own choices—by hundreds, if not thousands, of dollars. And most importantly...
Read More HERE
No comments:
Post a Comment