Trump won Nevada. Yes, the same Trump who said he will build a wall on the U.S.- Mexico border and make America great again. And don’t forget, the wall will be paid in full by Mexico. Perhaps what is more shocking is that he won Nevada with a solid showing of Latino voters. To be specific, 41 percent of Republican Hispanic votes went to Trump. Polls also show that Trump leads in most of the Super Tuesday states, and since 1998, every candidate who’s won the most states on Super Tuesday went onto become the party’s nominee.
It is now well past the idea that Trump cannot possibly be the Republican party nominee for the election. So what should we do? We prepare ourselves for what-used-to-be-an-unlikely-outcome and take a look at his tax reform plan.
His reform plan has four main objectives that seem to resonate among all presidential candidates: 1) tax relief for middle class Americans; 2) simplify the tax code; 3) grow the American economy; and 4) reduce the national debt and deficit.
1. Individual Income Tax
- Simplify individual tax brackets into 10, 20, and 25 percent brackets
- Increase single filer deduction to $25,000 and joint filer deduction to $50,000
- Capital gains and dividends tax are capped at 20 percent
- Repeal the alternative minimum tax
2. Business Taxes
- Reduce the corporate tax rate to 15 percent
- Repeal most tax breaks for businesses
- Enforce a 10 percent repatriation tax on the accumulated profits of foreign subsidiaries of U.S. entities
- Impose tax on profits of foreign subsidiaries of U.S. companies
The reform plan cuts taxes across the board, but the biggest beneficiary of Trump’s plan are the highest-income .1 percent of taxpayers (those who earn $3.7 million yearly) who’d receive a $1.3 million tax reduction on average. Trump also plans to bring the American companies back to the U.S. by attracting them with a lower corporate tax liability and imposing taxes on foreign subsidiaries. With more companies to collect from, the lower tax rate wouldn’t create a hole in the budget right?
According to the Tax Policy Center, Trump’s reform plan would reduce federal revenue by $9.5 trillion over its first decade- most of the revenue loss coming from individual tax cuts and the reduction in the corporate income tax. To put that into perspective, the U.S. government would have to cut the entire military, education, and Medicare spending to make up for the loss. Trump claims that he will implement a stricter budget oversight to cut unnecessary spending in Social Security and at a number of government agencies such as the Pentagon and the Department of Education. However, balancing the budget may prove to be much more difficult than “cutting the government overspending.