Donald Trump has “trumped” the Republican Party. With deft sleight of hand, Mr. Trump will take away the carried interest tax break for hedge fund managers and give it back by lowering taxes on large business and the wealthy. That’s a 20% reduction for business and a 6.6% reduction for the personal top income bracket. People in the top bracket will save $66,000 per $1million dollars which is more than what half of all workers make in a year.
Having a child care deduction sounds nice, but only 30% of tax payers itemize their taxes. People in the top bracket will benefit the most. The poor not at all.
As for eliminating the estate tax, only people like Mr. Trump and the Walton family will get a break while the rest of the people will have to make up the loss of revenue, or lose government services, or increase the debt.
This supply side economics of low taxes on the wealthy has never created jobs or grown the economy. The top 10% already have 95% of the household wealth and 80% of all stocks and bonds. The largest 14,000 companies out of 28 million businesses make 70% of all income. A little more money for them will not make a difference in growing the economy.
Income and wealth inequality is dragging down the middle class and taking us back to a “feudal society” in this country. Republicans say they are the party of business, but that is because Republicans allow business lobbyists to write the laws. Since 1929 Democratic presidents have improved the economy for all Americans more than Republican presidents have.
Republicans want to change the progressive income tax to a flat tax to lower taxes on the wealthy. President Bush cut the number of tax brackets down to seven and now Republicans propose only three tax brackets. All of our taxes except the federal income tax are flat taxes. Our most regressive tax (where the poor pay a higher percentage of their income) is the flat sales tax. We have a progressive income tax for a good reason. Most of the income that wealthy people have is not taxed, is taxed at a lower rate, or is delayed until their death. If someone owns assets that appreciate in value but a taxable event does not occur, there is no income tax to pay. Workers have to pay taxes on their wages when they get paid. A flat tax always favors the wealthy. Republicans hate the progressive income tax so much that they are proposing a federal flat sales tax of 30% to replace the federal income tax. Tangible items that most people buy, like houses and cars, would be taxed; but intangible items that wealthy people buy, like stocks and bonds, would not be taxed. Corporations would not pay the sales tax. Lower income people have to spend a higher percentage of their income to support themselves and their families than the wealthy do.
A wealth tax can solve the taxing problem. Household wealth in the USA is $86 trillion and the book value of corporations is over $30 trillion. Assuming the taxable wealth is $100 trillion and the federal budget is $4 trillion, a wealth tax of 4% would replace all federal taxes. A progressive wealth tax (what you own minus what you owe) that increments by .2% for every $1 million up to 5% would bring in sufficient revenue to cover the budget. For example, tax on $3 million of net worth would be $2,000 and $4,000 on the next million dollars. Only 10% of people have a net worth of at least $1 million. The remaining 90% of the population and most small businesses would pay no wealth tax. The wealth tax will create jobs and grow the economy and simplify the IRS tax forms for all.
Bruce Barnes, Precinct Chair
Montgomery County Democratic Party