The Trump Tax Plan

I am surprised that I have held off this long without a Trump post. However, his new tax plan has intrigued my interest. Right now Trump still holds a small lead over the other candidates. His lead is shrinking fast though to contenders like Ben Carson and Carly Fiorina. I sort of figure Trump wouldn’t be able to sustain such a massive lead. The scary part is that Carson and Fiorina are both so-called “political outsiders”. I consider them to be just as scary in a presidential role as Trump. My problem with Dr. Carson is that he is not really politically smart. His comments lately have been more outrageous than Trump. The sad part is that he can get away it. Due to certain social constructs. As for Fiorina, she’s a hard-line conservative that reminds me of Michelle Bachmann. She seems like she might be psychotic and unfortunately we need someone stable in the oval office. However, despite lack of quality candidates there is plenty to discuss. Especially, surrounding Donald Trump’s newly minted tax plan. Tax plans are controversial to say the least.

I did a brief look at Rand Paul’s tax plan. I was a little surprised because Trump plan does have similarities to Paul’s. Admittedly Trump and Paul don’t exactly like each other. Rand Paul outlines a plan that includes a 14.5 percent flat tax and similar to Trump’s plan the first $50,000 of taxable income would not be taxed for a married couple. Where Trump’s differs is that he would still install levels of tax increases. He also claims to eliminate loopholes for the rich. (without saying what loopholes?) Here is a breakdown preview: (Read the full version here)

Income Tax Rate Long Term Cap Gains/ Dividends Rate Single Filers Married Filers Heads of Household
0% 0% $0 to $25,000 $0 to $50,000 $0 to $37,500
10% 0% $25,001 to $50,000 $50,001 to $100,000 $37,501 to $75,000
20% 15% $50,001 to $150,000 $100,001 to $300,000 $75,001 to $225,000
25% 20% $150,001 and up $300,001 and up $225,001 and up

This chart is actually within the text of Trump’s long version of his tax plan. The basic premise of his new tax code is to throw out the old one which has 7 different levels and many loopholes. Trump wants to install a simpler and more streamlined tax code that allows for some relief for lower incomes.  Trump also highlights near the bottom about his plan for corporate taxes which he plans to lower to 15 percent which would be a little less than half of the current rate (35%). However, I feel that Trump fails the corporate tax rate because many companies end up not paying any taxes. I hear many candidates both from the right and left that claim high corporate taxes are the cause of businesses leaving. This is a lie. Let me explain it simply.

Many business get loopholes or deductions because of government programs or because of a good lobby. Lobbyists tend to wield lots of power with congress and can often get corporations off the hook from taxes. This is legal. However, companies will pay lobbyists fairly good money. Part of the problem is that businesses that make less income or depend on a small profit margin are hurt more by high taxes. Companies that are larger and make billions think about Exxon Mobile in this case, they could care less about the tax rate because they don’t pay much taxes. So, in reality any tax plan that cuts corporate taxes is helping small businesses. The larger corporations are moving overseas because of increased wages, increased costs of healthcare and increased operating costs overall.  I may not be a professional businessman but I can tell you that business has one goal and that is to make money. I feel like people forget that.

I’m not trying to sound like some evil corporate capitalist exploiter but unfortunately that is how the world of business works. Coming back to Trump tax plan, I think it’s a good start. It’s definitely surprising to see him do something that might actually work.  It’s also scary. The Trump tax plan is alright considering the sketch-ness of his other plans–especially immigration.

I just want to come back to why companies leave the US. Above I said “The larger corporations are moving overseas because of increased wages, increased costs of healthcare and increased operating costs overall.” I forget to mention that some business have seen a decrease in customers or a change in market. These could also put a business in trouble aside from high taxes. One struggling business that I happened to experience is Mcdonald’s. Mcdonald’s is the classic case of a billion dollar corporation with 36,000 outlets in the world. The gold arches has struggled in recent years. The main problem is that the market for fast food has recently become über competitive. Just to name a few competitors, Subway, Starbucks, Burger King, Wendy’s, Chipotle, Taco Bell, Panera Bread…etc etc. In recent years, the fast food market has become crowded with more healthier and environmentally conscious options. Mcdonalds has tried numerous times to change it menu, its restaurants and its reputation. Yet still Mcdonald’s is losing money and its profits.

I always consistently hammer liberals and people who believe in a 15 dollar minimum wage for being unrealistic. Moving away from Mcdonald’s business model of franchisees (Its been calculated that Mcd’s could rise it prices and still be fine) which are hurt by an increase in wages, but more importantly high wages tend to make companies either move or go out of business. I think some people confuse about how business work in the most simplest form.

A. A person or group start a business

B. Person or People grow business (Larger than they can handle on their on own)

C. Business Owner hires help to run business

D. Business Owner collects profits after operating costs (employee wages, healthcare, retirement, bills, stock, cleaning, transportation..etc..etc)

E. Business Owner invest money back into business OR keeps profit as salary

The basic premise is that employees get a share of the profit. However there is no moral code or set percentage of that profit that is due to the employee. It is up to the employer.  The exception being that the federal government sets the floor wage of $7.25. (Constitutionally the states and local gov’ts can set wage as high as they want). I do believe in a fair wage. But I think you have to be fair to a employer in the respect that not all employees deserve the same wage. Even I don’t expect to work for higher wage than someone who is more qualified than me. I used to work at Mcdonald’s making $7.50/hour when I first started. My boss made around 50,000 a year. (Despite being good friends he never was exact) My work was much different than his. He ran the Mcdonald’s from the business side plus dealing with the day to day operations. He regularly spent 12 hours or more a day in that place. Sure, the work was physically demanding but the skill level was nowhere near that of a person doing management and business operations. (Boss has 25 years of experience and two associates now for reference below)

My bottom line is that a person should earn a salary that covers one of two things or both:

Education level: Dropout, High school, Associates, Bachelors, Masters, Doctorate (Medical or Academic or Law)

Experience: 0-2, 3-5, 5-8, 8-10, 10 or more (years)

Granted, for me I would fit into the Bachelors degree category with 0-2 years of professional experience. I’d say it would be acceptable if an employer paid anywhere 25,000 to 35,000 a year. Obviously all values depend on your career path and the field your in.

Regardless, my argument will fall on deaf ears. In the end, I feel like Trump is going in the right direction with his tax plan. My gripes about the nitty gritty details is something that will be glossed over in every debate. I hope that I can bring more attention to things that are true cause of our problems. There is no easy fix but we need to realize what is really going on in order to even try to fix anything.

Thanks for reading!

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