April 27, 2017
What does change in Washington mean for the change in your wallet? We're about to find out! With April 15th still fresh in everyone's minds, President Trump couldn't have picked a better time to roll out his plan to slash taxes. Two weeks after the IRS took a big bite out of people's wallets, the new administration is ready to sink its teeth into something else: the confusing tangle of the U.S. tax code.
For years, conservatives have wanted to tame the complicated system weighing down Americans -- and with Republicans at the wheel, the Trump team will get a crack at doing exactly that. Yesterday, the White House got the conversation rolling with a simple one-page plan of the president's vision for taking some of the sting out of the process. At a press conference headlined by Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, the duo warned, "This isn't going to be easy. Doing big things never is. We will be attacked from the Left, and we'll be attacked from the right, but one thing is certain: I would never, ever bet against this president. He will get this done for the American people."
For families, the relief can't come soon enough. After eight punishing years under Barack Obama, Americans are ready to recoup some of their losses. Under the Trump proposal, they'd have the opportunity to do that, thanks to a streamlined system that shrinks the number of tax brackets from seven to three: 10 percent, 25 percent and 35 percent (down from 39.6 percent now). "The change would raise the deduction for couples from $12,700 to approximately $24,000 and raise the deduction for single filers from $6,300 to $12,600," analysts explain. That's a great development, since, as Cohn explains, it means a "married couple will not have to pay taxes on the first $24,000 it earns."
Conservatives also had plenty to cheer in the child tax credit, which has been a consistent theme of this team since the campaign. Although details are vague, it's obvious that this administration cares about giving parents the flexibility to decide what's best for their children. The Obama economy has made it very difficult for parents, both for their finances and their ability to start and raise a family. Trump's plan recognizes the importance of the family in society and the importance of children to future economic growth. Letting parents to keep more of what they earn to provide for their kids' well-being makes immediate and long-term sense.
Another high point of the plan is that it kills the death tax. Thanks to President Obama, the tax code never says die -- even when the person it's taxing does. When President Bush was in office, Americans got temporary relief from estate taxes like this one. That all changed under the Democrats' control, and families with small businesses in particular paid the price. Even now, the government continues to take a slice of the money, income, or property when it's transferred from a deceased family member to the beneficiary.
It's especially outrageous when you consider that this is money that's already been taxed when it's earned! And while the Left is fond of saying the death tax only affects the rich, the reality is that family farms, ranches, and small businesses are hit hardest. If a family doesn't have the means to pay the death tax on a family farm or business, they're sometimes forced to sell a portion -- if not all -- of their estate in order to comply. In the words of House Majority Whip Steve Scalise (R-La.), that's "morally wrong." So is the 3.8 percent tax on some investment income that was introduced as part of Obamacare, another target of Trump's plan.
Both the GOP blueprint and Trump's call for eliminating all individual deductions -- except when it comes to charitable giving, mortgage interest and retirement savings. From a business perspective, companies will be glad to know that the corporate tax rate would drop to 15 percent, which would be a major change from the whopping 35 percent companies pay now.
Although there are plenty of particulars to iron out, White House officials were clear: "We have a once-in-a-generation opportunity to do something really big." And House Speaker Paul Ryan (R-Wisc.) and Senate Majority Leader Mitch McConnell (R-Ky.) seemed to agree, telling reporters this outline would "serve as critical guideposts from Congress and the administration as we work together." The last major tax overhaul was more than 30 years ago in 1986. Taxpayers are due -- in more ways than one!
Tony Perkins' Washington Update is written with the aid of FRC senior writers.