President Trump released his new tax plan for America, and it delivers on his promise to lower corporate tax rates. According to USA Today, “Trump’s plan would lower corporate tax rates to 15% from the current 35%. It would also reduce the business income rates paid by the so-called pass-through businesses – including many small businesses formed as partnerships and limited liability companies and some larger entities like hedge funds – to 15%.”
The huge decrease is being labeled as a victory for small and large businesses alike, but it is also being criticized for government support. The age old argument of the government being too big is a reasonable one. With around $20 trillion in national debt, it is logical to want to decrease government spending as much as possible while (possibly) decreasing the amount regular Americans spend towards it. Unfortunately, Trump’s new tax plan decreases business tax expenses, but keeps spending at current levels. With the current tax plan, we will undoubtedly see our government debt rise further than under the Obama administration.
That was always the major criticism with the “Trump” plan. He gave promises towards creating a better healthcare plan, tax cuts, and improved support to combat illegal immigration, but never offered a solid plan on how he would pay for them. This only furthers the question of “where is the money coming from?” The Trump administration has argued it will help improve GDP but that’s been proven to not be accurate. As we learned from Obama’s stimulus plan, when businesses gain extra money, they don’t hire as many people as the government, or the nation would need for it to be sustainable. While Trump is willing to offer incentives, I’m not sure he can afford the type of incentives needed to make this project work on a large scale.
So why is this bad for low income families? Well currently about $300 billion is spent on low income programs by the federal government. These programs are necessary for the less fortunate. Not in some altruistic idea, but for a nation to be sustainable, those at the bottom need assistance to gain opportunities at the middle or top. With the drop in taxes, businesses will make more sure, but programs will have to be cut.
But can’t these businesses hire those lower income people now with their additional funds? In most cases no. If a company in New York gets an additional $500 million – $1 billion in income, people in states that are most negatively affected, such as Mississippi, Louisiana, and the like will not be able to reap the benefits due to location, and skill set. As a small business owner I support tax cuts, but if it causes the lower class to drop even further, and exacerbates the disappearance of the middle class, then I cannot support it. Yes our taxes should be lower than 35%, but maybe 15% is a bit too low. Hopefully President Trump can find a happy medium moving forward.