As a proclaimed Christmas present to the citizens of the United States, President Donald Trump signed the Tax Cuts and Jobs Act, which lowers the tax rates of individuals and corporations across the country. The tax act cuts the corporate tax rate from 37 percent to 21 percent, which is a permanent change. For most individuals, however, the changes are far less significant.
With the GOP holding the presidency and a majority in each house, it seems the time has come for them to make some drastic changes in the U.S. tax system. Unfortunately, these changes that are a so-called gift to the people really only have a significant impact on corporations and the wealthy.
The act maintains the seven different income brackets and lowers the income tax rate across the board except for the lowest income range, $0 to $9,525 if filing as single and $0 to $19,050 if filing as married-joint, which will remain at the 10 percent income tax rate. The six other income ranges will experience a decrease in the income tax percentages, but more in the range of two to four percent, rather than the 16 percent drop that corporate entities will receive. While the corporate tax changes are permanent, the decrease in percentages for individuals will only last until 2025, and will then revert back to the 2017 percentages. Although the tax act does lower the income percentages, it eliminates personal exemptions, which previously allowed taxpayers to subtract $4,150 for each person claimed. For those who have several children, this new tax plan may ensure that they pay more than they did under the previous tax plan.
Along with the large disparity between the haves and have nots, to which this tax cut seems to be adding to, the tax act also allows for oil drilling in the Arctic National Wildlife Refuge, which seems unrelated to taxes. The act also repeals the Affordable Health Care tax, which was applied to those without health insurance under the Obama administration. In cutting the Obamacare tax, the Congressional Budget Office estimates that around 13 million people will drop their health care plan and save the government nearly $338 billion. While this may sound like a great way to balance out the losses of the large tax cuts, it comes at the cost of more expensive health care for those who do choose to keep their health plans.
The issue that I have with the Tax Cuts and Jobs Act is not the lowering of taxes; it would be foolish to expect anything different from a Republican-drafted tax plan. I am concerned with the large discrepancy in the cuts to corporate taxes versus personal income taxes. It is hard not to see this as anything other than the GOP helping out the big companies that donate to their campaigns and advertising while leaving the little guys in the dust.
The tax act is an obvious attempt to re-create the Reaganomics, or trickle-down economics, of the 1980s, meaning that corporate tax cuts presumably would allow companies to hire more employees, thus growing the economy, cutting unemployment and providing economic stability for more people. As great as this economic plan sounds in theory, I would consider it idealistic, unrealistic or even delusional in todays economy. In a world that is constantly making great strides in technology, it is reasonable to assume that robots and technology will continue to replace many jobs over the next few decades.
According to Business Insider, the electric car giant Tesla has plans for the near future to create a fully automated assembly line for its vehicles. With this in mind, the likelihood of large corporations hiring a bunch of human employees that must be trained and paid is constantly dwindling. Many of these companies, especially those involved in manufacturing, will most likely invest heavily in automating their process in order to maximize profits for shareholders.
Dont get me wrong, I have nothing against rich people making money. I would want to grow my fortune, too, if I were in that position, but I have a problem when it comes at the expense of the people who struggle paycheck-to-paycheck. I am not advocating for handouts to the poor or extra taxes on the rich, but I think there should be a level playing field. Even if the tax plan had cut corporate taxes by only five percent, that is still a huge chunk of money when considering multimillion and multibillion dollar companies.
The elected officials in the government are responsible for representing the interests of their constituents and the citizens of the U.S. as a whole, but this tax act simply does not do that. Instead, the act seems like a payout for continued corporate support of the politicians who passed it.