Congressional Democrat’s first reaction to Trump’s tax plan roll out is to complain that it may add to the national debt. Democratic President Barack Obama added approximately $8 trillion to the national debt in nominal terms. That is an increase in the national debt by 70% from the time he took office.
Representative Ted Lieu (Democrat-CA) chimed in by saying,”The Trump tax plan does not pay for itself…it doesn’t even come close. America is a great nation, but we haven’t yet discovered magic.”
Senate Minority Leader Chuck Shumer said,”I can tell you this: If the president’s plan is to give a massive tax break to the very wealthy in this country, a plan that will mostly benefit people and businesses like President Trump’s, that won’t pass muster with we Democrats.” Yet Shumer was silent as Obama ran up the debt during his eight-year term.
Senator Bob Casey said, “A massive tax giveaway to millionaires, billionaires and big corporations at the expense of middle-class families in Pennsylvania … It won’t create jobs, increase middle-class incomes or grow our economy.”
Senator Rand Paul, who is widely considered a leader of the Freedom Caucus in Congress, wrote a column for Breitbart that is a ringing endorsement of the Trump’s tax plan. In the column, he applauds Trump for having the courage to propose such drastic tax cuts.
Rand Paul wrote,”I’m hoping the President has learned three things from his Obamacare repeal experience. First, work with the true fiscal conservatives in Congress to come up with a great tax plan. Second, keep it simple, and make sure everyone in America will both know and see the benefits. Finally, remember who elected you, and heed this advice one ever knocked doors or made phone calls for “revenue-neutral tax reform.”
Earlier in the column, Paul berated the idea of revenue neutral tax reform by saying,”Too many Republican have become timid about tax cuts, often spouting the milquetoast line of “revenue neutral tax cuts. Let me translate that little bit of Washington-speak for you. “Revenue neutral” tax cuts aren’t really tax cuts. It’s more like tax shifting. Some will pay more. Some will pay less. And the net effect will be that government will collect the same amount of taxes.”
With Paul’s support, much of the Freedom Caucus will likely follow. This will remove the obstacle to prevented the healthcare reform bill from getting to Trump’s desk.
In the press conference on Wednesday afternoon first Trump economic advisor Steve Cohn and then Treasury Secretary Mnuchin laid out the bullet points for Trump’s plan.
The corporate tax will be cut from 35% to 15%. Mnuchin points out the corporate tax will also apply to small and medium-sized businesses A drastic cut that will bring the US closer in line with a majority of countries competing for global corporate headquarters.
Much of the mainstream media and the Democrats in Congress are focusing on this first point.
However, they went on to lay out an aggressive income tax cut for individuals. Instead of the current seven tax brackets, the plan would simplify to three brackets. The highest rate would be 35% (down from 39.6%), 25% and 10% (down from 15%). Mnuchin added that couples would not pay any Federal income tax on the first $24,000 earned each year. This plan equates to a large raise in income for individuals and families across the board.
The plan will also repeal the much-loathed death tax. The Federal Government is taxing previously taxed money and that is a huge burden on families.
And finally, the top capital gains tax would be brought down to 20% (down from 23.8%). The 3.8% was tacked on during the Obama administration as a way to partially pay for Obamacare.