I'm not going to write too much about this right now, since we still don't have all the specifics, but President Trump today unveiled at least part of the GOP tax reform plan.
So far, we're hearing that the three-tiered rates are locked in. We don't know the specific income cutoffs, but we do know he wants to raise the bottom rate from 10% to 12%. The catch is, along with that, he wants to increase the standard deduction to $12,000 for a single filer and $24,000 for those who are "married filing jointly."
Big picture details: Republicans plan to collapse the number of brackets from seven to three. The standard deduction would almost double to $12,000 for a single filer and $24,000 for married couples, meaning Trump can accurately argue that many more low income earners would pay no tax under his plan. As we previously reported, the top tax bracket would fall from 39.6% to 35%.
And here's the President himself, talking it up about an hour ago:
So, initial thoughts. I'd prefer straight, across the board, cuts that force the federal government to do less with less. But (and again this is without having seen the final, concrete, numbers) this at least sounds better than what we have now. As Axios points out, it allows Republicans, and the President, the ability to accurately claim that this benefits low income families, while still giving a cut to the top bracket. In short, it makes it harder for Dems to scream that it only benefits the rich. It's also expected to cut the corporate rate to 20% - not as much as Trump's desired 15%, but still a step in the right direction.
In addition to a lgeneral lack of details, my early reservations come from the fact that it's always easier for the left to push for less in the way of deductions than it is for them to champion actual tax increases. So, in the future, when they want to raise taxes on everyone, they can say "we're not raising taxes, we're lowering the fatcat's deduction scheme." I'd rather take that argument off the table up front and make the case that, since the top earners pay more, they deserve the cuts.
The President is supposed to speak about this tomorrow, but it's clear that the administration is trying not to offer all the specifics. Even tomorrow's speech will allegedly omit the income cutoffs for each bracket, and that should raise an eyebrow.
Obviously, these thoughts are subject to change based on the final plan. We'll have more when we get some more specifics.
