Wednesday was officially “tax reform” day for President Trump and Congressional Republicans. Having failed to repeal the Affordable Care Act, the GOP is moving on to a measure which may not have any better chance of passing.
During the 2016 campaign, Trump made lots of promises regarding taxes and what he’d do if elected. But the tax plan he unveiled would seem to be in direct contradiction of several of those promises.
Cutting The Corporate Tax Rate
Trump said he would cut the tax rate for small and large businesses to 15 percent. But the plan he announced today would cap the corporate tax rate at 20 percent. The current top rates for companies are 34 to 38 percent. Trump would cap the small business rate at 25 percent.
Tax Cuts For Freelancers
Trump also promised to extend the 15 percent corporate rate to freelancers. This would also have allowed those who qualify as “high earners” to recategorize their income as business income.
But the proposal laid out Wednesday doesn’t keep the promise to recategorize freelance income, only stating:
“The framework contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate.”
Translation: Don’t hold your breath.
Closing Loopholes
The draft says Trump plans to close “many” business tax loopholes. One doubts if any of those will apply to those in the real estate business. As a matter of fact, the plan would apparently create a new loophole which would benefit people like Trump and his family members.
Making Taxes So Simple That Tax Preparation Companies Would Go Out Of Business
While running for president, Trump said he would make taxes so simple that H&R Block would go out of business.
While the Trump tax code would be somewhat simplified, H&R Block executives are guaranteed to sleep well at night for years to come.
Featured Image Via WBAY
