The Truth Behind Trump's Tax Plan: Good or Bad?

Is Trump's tax plan good or bad? This article delves into the details and implications of the tax policies proposed and implemented during the Trump administration, focusing on their effects on the wealthy and the average American taxpayer.

Understanding Trump's Tax Plan

There is no "Trump" tax plan as such. The White House hasn't proposed a single piece of material legislation. However, the current system has been criticized for favoring the ultra-wealthy and failing to benefit the working class adequately. Let's break down the pros and cons of the existing tax framework.

Are Pet Taxes Included?

President FDR once told us that his little dog Fala resented a tax, emphasizing the unfairness of taxing pets and pet products. This point is often overlooked but highlights a key issue in tax policy: exclusions and exemptions.

Indexing Capital Gains to Inflation

There's another angle to consider: indexing the Capital Gains Tax to inflation. This proposed change would give another financial break to the wealthy, as it effectively reduces the real value of the tax burden over time. Despite this, such an action will only exacerbate the deficit.

Corporations and the 1%

Big donors and corporations played a significant role in the recent tax cuts. The GOP agreed to give them a tax cut or risk turning to small donors for funds. This arrangement shows a clear bias towards the wealthy and well-connected, detracting from the true spirit of tax reform.

Economic Implications

The current economic situation is near full employment with wages ticking upward. Historically, the ideal fiscal policy is to move toward a balanced budget or even a surplus when the economy is strong, so that you'll have more leeway to run deficits when times are tough. Examples include President Bill Clinton's second term, where the economy was strong.

National Debt and Tax Cuts

The national debt stands at over 100% of GDP and is expected to remain high in the near future. Additional tax cuts in a strong economy can lead to overheating, causing extra trouble down the road. A balanced budget or surplus is more prudent in such conditions than tax cuts.

Tax Cuts for the Working Class

From a purely fiscal standpoint, it makes more sense to engage in mild austerity and modestly raise taxes to reduce the deficit. However, there could be a case for tax cuts aimed at working-class individuals and families, given the long-stagnant wages and rising inequality in the United States. Such cuts could provide much-needed relief to workers struggling to cover living expenses, especially in areas with rising housing and rental costs.

Conclusion

In summary, Trump's tax plan has significant flaws that favor the wealthy and shield the ultra-wealthy from paying their fair share. It's essential to consider the broader economic implications and ensure that any tax reforms benefit the majority of taxpayers rather than the elite few.