Tax reform - How the Republican tax bill compares with previous reforms

LafayetteBis · Feb 18, 2018

Here: How the Republican tax bill compares with previous reforms

Excerpt:

REPUBLICANS like to say that their tax bill, which passed the Senate on December 2nd, is the first tax reform since 1986. President Donald Trump likes to call it the biggest tax cut in history. Mr Trump’s claim is easily disproved (see chart). Yet the comparison with the law of 1986, passed under Ronald Reagan, is more curious. There is no doubt today’s bill, like the older one, contains significant reforms. But the differences between the two efforts stand out more than the similarities. They are not quite mirror images of each other—but they are not far off.

{But} There are three main differences between then and now. First, the centrepiece of today’s bill is a cut in the corporate tax rate, from 35% to 20%. At first glance, this seems comparable to the change to the levy in 1986, when it fell from 46% to—after a brief delay—34%. Yet such was the volume of deductions that the 1986 reform swept away, that it in fact raised average taxes on businesses. Notably, investment incentives were sharply curtailed. Today’s bill expands them, allowing businesses to deduct the full cost of investments in the year they are made (until 2023). Many economists see these investment incentives as a powerful stimulus for the economy.

Today’s bill is sharply regressive, despite the fact that it barely touches the top rate of tax. That is partly because Mr Trump’s priority has been tax cuts for businesses, whose owners tend to be rich. True, the bill curbs some corporate deductions, such as a tax break for manufacturers, and another for debt interest. But these changes do not come close to paying for the size of the tax cut that Republicans propose. A look at the stockmarket, which soared as the bill passed the Senate, shows that most businesses can expect to do well.
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When the next crisis looms regarding the National Debt, and it will arrive soon enough, we shall all know who to blame. Donald Dork, the worst PotUS in two centuries.

The US is living on borrowed time. Enjoy ... !

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Tax reform - How the Republican tax bill compares with previous reforms

LafayetteBis Well-Known Member Past Donor

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Tax reform - How the Republican tax bill compares with previous reforms

LafayetteBis Well-Known Member Past Donor

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