Where's Our Tax Reform?
“In 1935, the basic 1040 form that most people file had two simple pages of instruction. Today, that basic form has 100 pages of instructions, and it’s pretty complex stuff.” - President Trump
With the debt of the United States over $20 trillion, now is the time to pass meaningful tax reform that can get our spiraling debt back under control. Tax reform is one of the biggest promises of President Trump, and with ever expanding debt, it is time for this promise to be kept.
One of the first indications of the President's views on tax reform was a four page plan issues by the campaign thaw was called “Tax Reform that will Make America Great Again.” Fellow Millennial Review Fiscal Policy Contributor Matthew Vitale discusses parts of this tax reform plan, and sparked an interesting dialogue about the reason we need tax reform. However, aside from comments during speeches, the American people have yet to see President Trump fight for tax reform.
The Trump Campaign’s tax reform plan was a massive reduction of the current tax code, and the administration laid out their objectives for tax reform. The number one goal of this tax plan was relief for middle class Americans followed closely by simplification of the tax code. Additionally, on April 26th, 2017, The White House released another one page document about their plans for tax reform.
On April 26, 2017, The White House said that, “We are going to eliminate most of the tax breaks that mainly benefit high-income individuals. Home ownership, charitable giving, and retirement savings will be protected – but other tax benefits will be eliminated” and that, “The President is going to seize this opportunity by leading the most significant tax reform legislation since 1986.”
Despite this being said months ago, none of these plans have been enacted by the President so far.
However, it appears the President seems to have finally moved back around to the item of tax reform as one of the next pieces of legislation he will attempt to push through Congress.
On September 6th, President Trump called for an overhaul of the nation’s tax code. During his speech President Trump spoke of his administration's plans to bring a one page tax form similar to the form he mentioned during his Presidential Campaign. President Trump restated his desire to bring the nation's federal corporate tax rate down from 35% to 15%.
None of the recent speeches given by President Trump have given any insight into when and if Trump will work to push through his new tax plan.
Although it is not known if President Trump will hold true to this campaign promise, it is reported that on Monday September 25th, President Trump will welcome leaders from Congressional groups to the White House to discuss plans for tax reform. Later that week the leaders of the Republican Party are also scheduled to meet and plan out their strategy on tax reform.
What will be in the President's tax reform is still unknown, but President Trump is on record as saying that, “If they [taxes] have to go higher, they'll go higher, frankly. We're looking at the middle class and we're looking at jobs.”
Here are a few high priority points that can be expected for President Trumps tax reform.
First, reducing the number of tax brackets from seven to three. President Trump has promised reducing the marginal tax rate to three brackets 10%, 25%, and 35%. However, there has been little mention thus far of what income brackets these marginal tax rates would serve.
Second, eliminating the estate tax, colloquially known as the death tax. The estate tax negatively impacts Americans who have a majority of their investment in land. When the landowner dies the land left to the family will incur the estate tax, and this forces many families to liquidate the land to cover the taxes incurred from the death tax.
Third, reducing the 35% federal corporate tax to 15%. The reduction of this tax rate goes hand in hand with the President’s promise to bring businesses back to America. This also fulfills a major goal of the President to bring jobs back into the US by lowering the tax burden of job creators in this country.
The overall goal stated by President Trump is to bolster the economy and bring jobs back to America, and with midterm campaigns kicking off in a few short months, it is time to see the tax reform promised by the GOP and President Trump.
Although the President is looking to push this legislation through Congress there is still going to be a massive fight.
Passing tax reform of any sorts will be a long and arduous task with Majority Leader Mitch McConnell saying in August that the Republican Party will not work for bipartisan agreement on tax reform. Although the GOP controls all branches of government they have struggled to pass any of their meaningful campaign promises. The coming weeks will be critical, and will be the last opportunity for the Republican Party to pass big ticket policies before the midterm elections in 2018.