Experts Say the United States Cannot Afford Trump’s Stealth $100- Billion Tax Plan
President Trump tends to take bold actions on a weekly, if not on a daily basis, including with his planned tax cuts. Recently, those in the know heard about a potential plan that would cut $100 billion in taxes, something which would likely benefit high-net-worth individuals instead of the average person.
The Tax Plan
The tax plan making headlines at the end of July and early August did not come from President Trump himself but from U.S. Treasury Secretary Steven Mnuchin. This is a stealth $100-billion plan, and if approved, it would index the capital gains taxes to inflation.
What Opponents Say
Those who are against Mnuchin’s proposed stealth plan for taxes say that this is underfunded like the previous tax cut under President Trump. Just as the tax overhaul from last year has only reaped rewards for those who pay corporate tax, this proposed plan would likely only benefit the most high-net-worth individuals in the country.
To make matters worse, this tax cut could take place without any Congressional approval.
What Supporters Say
On the other hand of the spectrum, there are supporters of the proposed tax cut. They argue that this reduction to the capital gains taxes would end up paying for itself. Supporters made identical claims the previous year only for the tax cut that went into place to bust budgets.
The Previous Tax Cut Was Not Financially Savvy
Based on the experience with last year’s cut to corporate tax, experts do not expect this proposed tax cut to have the funding it needs. Supply-side economists and those supporting that cut had claimed it would pay for itself, but that was not the case. Instead, the Bureau of Economic Analysis found that the corporate tax revenue is now close to a 75-year low, plunging to just 1.3 percent of the full federal take.
Following that previous tax cut, the Treasury Department now has begun borrowing much more quickly than previously anticipated. In April, the estimate for how much the Treasury Department would borrow this quarter was $56 billion less than the actual $329 billion. The deficit is constantly growing and projected to hit $1 trillion in the near future.
The U.S. Cannot Afford the Cut
Based on the growing debt and the failure of the previous tax cut, those who have taken the time to step back and analyze Mnuchin’s proposed cut say that his plan would likely lead to increased debt. There is also the problem that Congress has the “power of the purse,” so making the tax cut without Congressional approval would be highly questionable.
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