Saturday, September 30, 2017

Republican tax reforms to favour the rich - surprise, surprise!

Those poor benighted people who voted for Donald Trump, the downtrodden working class masses ignored by mainstream politics, well, if they were starting to have a few doubts about the tweeter-in-chief, they might really start smelling a rat now.
Trump's tax reform bill, a major plank of his election campaign (along with repealing Obamacare, which is looking pretty much moribund now) has been revealed for what it is - a tax cut for the wealthy at the expense of the midde class. The Federal Reserve, America's central bank, is warning that the proposals will probably lead to rampant inflation and a ballooning of an already critically high national debt, but it is the inequity issue that really has people incensed.
The prominent nonpartisan think-tank, the Tax Policy Centre (TPC) has issued a preliminary report on the Trump administration's tax proposals ("the biggest tax cut EVER!"), showing that fully 50% of the tax benefit of the plan goes to the top-earning 1%, which in America is apparently those earning over $730,000 a year (which in itself is mind-boggling). These fat cats would see their after-tax incomes increase by 8.5% next year under the Republican proposal.
Taxpayers in the middle class, on the other hand, the segment of society the tax reforms are supposed to help, can expect much more modest gains (the whole of the bottom 95% of earners can expect an average increase of just 1.2% next year), and many may well see their tax bills increase, mainly due to the elimination of many itemized deductions. About 12% would see tax increases next year, including over a third of taxpayers making between $150,000 and $300,000.
What is worse, the number of taxpayers who will see tax increases under the plan will grow over time, mainly because the Republican plan would replace personal exemptions (which are index-linked to inflation) with non-index-linked tax credits. By 2027, taxes would increase for about a quarter of Americans, including nearly 30% of those earning between $50,000 and $150,000, and 60% of those earning between $150,000 and $300,000.
The TPC's analysis is preliminary mainly because the Republican plan is woefully short on many important details, like the new tax brackets that will be used. But it seems clear that the Republicans are just being Republicans here, and Trump is just being Trump, and any naive voters who expected anything different have only themselves to blame.

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