What Is the Donald Trump Tax Plan and What Would it Mean For You?

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This morning Donald Trump announced his plan to reform the tax code. The plan cuts rates across the board, similar to the Jeb Bush plan. The plan to pay for this is to cut out loopholes and cap deductions similar to what was done in the 80's. Those earning less than 25,000 will pay no tax at all. For 31 million Americans, they would pay no tax. For the top bracket they would see a tax cut from 39.6% to 25%. The corporate tax rate would be decreased from 35% to 15%.

Trump's plan for the rest of the tax brackets starts with the lowest bracket of 10 percent and would apply to income from the $50,000 - $100,000 range for a married couple. The next bracket is set at 20 percent and  would apply to married couples earning more than $100,000. The plan aims to eliminate the alternative minimum tax and would slash the highest capital gains rate to 20 percent from the current 23.8 percent. Contrary to what he seems to think, this plan would be a massive tax cut for the richest individuals in our country.

Contrary to popular belief the U.S. has one of the most progressive tax codes in the world. more than 40% of Americans pay no federal income tax at all under the current plan so this would not really be any change for them, but it sounds great on the stump. Instead of such high marginal rates,  most other countries use a form of a consumption tax, otherwise known as a VAT. A VAT is basically a sales tax on all new goods.

It would also cut the rate at which overseas profits are returned to the U.S. to 10%. This has been a popular idea that House Republicans have been in favor of for years, and may even include in the Highway Trust Fund talks.

While Trump claims that his plan won't increase the deficit, one might wonder if the increase to hedge funds along with the cuts in overseas taxes, loopholes and deductions will be enough to equal his spending ideas. Trump's immigration plan alone would cost hundreds of billions of dollars and have a negative impact on the economy of over $1.7 trillion.

Last night when he outlined the basics of a healthcare plan he outlined a massive medicaid expansion. It is already anticipated that Medicaid will cost our country $100 billion per year by 2020. If he's not cutting entitlements, then where are his spending cuts coming? He's not planning on cutting military spending, so where is he supposed to make up the difference?

Why is it important to cut the deficit? If these cuts and reductions are not enough, it will only add to our massive $18.4 trillion debt. For reference that's equal to 154,000 per tax payer.

From what we have seen, the Trump tax plan coupled with his spending plans would mean massive deficits. Even with all deductions removed and all loopholes closed (which is not what Trump is suggesting) we would likely widen our deficit with this plan. In fact most experts are saying it would be almost impossible to be revenue neutral with this plan.
While there would certainly be increased  benefits to individuals with this plan and growth to the economy, most estimates believe it would cost us hundreds of billions in lost revenue yearly. It is impossible to have continuous growth, and at some point we would see another recession, and more than likely it will be during the next 4 years statistically speaking . When that hits you can guarantee revenues would plunge and deficits would grow massively.

Nothing in the Donald Trump plan is new. His tax cuts and loophole reductions are almost identical to those proposed by Bush, his overseas profits plan has been around for years. In such a highly touted tax plan that was supposed to be tough on taxes, this plan is one of the weakest attempts that Donald Trump has put out there to reform anything.

We Are Headed For Another Government Shutdown and It Could Be Costly

The Senate is expected to vote this week toward avoiding a government shutdown on October 1. With little support coming from the House though, it is likely we will see the government shutdown next week. The only real hope is a coalition of moderate Republicans and Democrats working together to pass something this week.

Congressional Republicans are holding up the continuing funding resolution due to a debate over funding Planned Parenthood. This began with videos which showed Planned Parenthood officials discussing payment for procuring aborted baby tissue. These videos have caused an uproar among conservative members of the house and they have been weighing whether to try to strip federal funding for the nation's largest provider of abortions in a spending bill that must be passed before the government’s current funding expires on September 30.

A government shutdown results in non essential portions of the government being shut down. Vital portions would stay intact such as the USPS, Department of  Defense, Social Security, Medicare and Medicaid.

Most of the government actually isn't affected at all, and often even those who are still have workers performing their job functions.The shutdown, saw roughly 800,000 federal employees sent home and national parks and services closed.  Most of these employees however continued work from home on their projects unpaid until the shutdown ends. They were then given back pay for this time period.

The 16-day shutdown in 2013 also stopped the creation of an estimated 120,000 new jobs, according to one report by the Council of Economic Advisers. It dug into the GDP for that year by over 24 billion dollars. Considering the instability in China's markets and with several countries around the world, this is not the time for the government to be causing any decline in economic output.

Until recently, Senate Republicans had indicated they would likely wait to see what kind of spending bill would be passed by the House, where there is greater GOP opposition to any spending measure that includes Planned Parenthood funding. Since the House is only in session for a short time this week and has no such measure on it's calendar the Senate looks to be attempting to act first.

“It’s an exercise in futility," Senate Majority Leader Mitch McConnell said in an interview with Politico. "I’m anxious to defund Planned Parenthood" but "the honest answer of that is that’s not going to happen until you have a president who has a similar view."

This comes as presidential hopeful Senator Ted Cruz has stated his opposition to any bill allowing Planned Parenthood funding. "In light of recent and horrific revelations that Planned Parenthood is trafficking in fetal tissue and body parts from abortions, we urge you not to schedule or facilitate the consideration of any legislation that authorizes or appropriates federal dollars for Planned Parenthood."

Last month he also stated, "I believe we should use every and any procedural tool available to defund Planned Parenthood."

Other Senators have criticized Ted Cruz for his views on a government shutdown. "Given the challenges and threats we face at home and abroad, I oppose risking a government shutdown, particularly when it appears there is no chance of achieving a successful result. Nevertheless, as I understand it, you have been circulating a letter to our colleagues asking them to oppose any government funding bill that continues to authorize funding for Planned Parenthood. … How do we get 60 votes? And if for some reason there were 60 votes, how do we get 67 votes in the Senate to overcome a Presidential veto?” Senator Kelly Ayotte asked in a recent letter. “During the last government shutdown, I repeatedly asked you what your strategy for success was when we did not have the votes to achieve the goal of defunding Obamacare, but I did not receive an answer."

With fears of the economic effects a shutdown could have, industry leaders are calling for compromise. "A democracy is a compromise by its nature. It’s not a dictatorship. So anyone who says, “my way or the highway on one issue,” isn’t necessarily thinking about the United States of America. And so I wish people to overcome that kind of stuff. A government shutdown is just bad management."JP Morgan Chase’s CEO Jamie Dimon said in a recent interview with MSNBC.

Many Americans view it as that; failed leadership by both parties that is leading to a shutdown. A lack of compromise lead the last Congress to be the least effective in history. There is a strong belief that the extremism we are seeing in Congress, displayed in the house especially is directly linked to the gerrymandering of districts throughout the country by both parties. This gerrymandering guarantees seats and power at the cost of extremism. This has lead to the rise of the Tea Party and concerns over the debt ceiling being raised and government shutdowns.


With less than 9 days to go before a possible shut down, it is becoming more and more likely that Congress will not be able to pass a funding bill in time. Democrats are unlikely to back down, and President Obama has already promised he will veto any bill that defunds Planned Parenthood. Some have argued that it was not the founders intent to use the veto as a partisan tool, but rather as a constitutional safe guard against abuse. Others point that this authority has been used in this manner for decades.  Needless to say, if this shutdown lasts longer than the one in 2013 (16 days), it could become very costly to our economy and our government.