Donald Trump’s proposed budget was made public on Thursday, and it shows a radical reorganizing of the federal government’s priorities (while keeping overall spending the same).There would be major increases in military spending to turn up the heat on ISIS, and in the homeland security budget to fight illegal immigration. These spending increases would be offset by cuts in other areas of government.
That’s just spending – but what about taxes? In his recent interview with Jesse Waters, Trump revealed his ideal tax rates. Here’s the excerpt:
WATTERS: “The income tax rate, what are we talking about? What would you like to see the top rate be?”TRUMP: “Well we’re going to get a big reduction, we’re going to bring business down from 15 percent to 20 percent from 36 percent and 38 percent and higher in some instances. We are the highest-taxed nation in the world. And we are going to bring taxes way down. And for middle income, we’re also getting rid of brackets. We are going from 7 to 4 or 3 brackets. And that will be such a pleasure.”
WATTERS: “What would you like to see the brackets look like?”
TRUMP: “Well I would like to see zero if you don’t make much. Like zero, and that’s what it’s going to be, it’s going to be zero up to a level. Then it’s going be 12.5 percent, 15 percent. It’s going to be 10 percent. We’re working on the different numbers right now. It will be the biggest tax cut since Reagan and probably bigger than Reagan.”WATTERS: “Very good because I need the money.”
The “business tax” he was referring to is the corporate income tax, and he’s basically right that it’s the highest in the world (with the exception of the UAE, and Puerto Rico by 0.1%).
The trend globally has been towards lower corporate tax rates – with the exception of us.
Naturally, such a high corporate tax rate is dampening American competitiveness. According to a study from Business Roundtable titled “Advancing America in the Global Economy,” “the tax rate is more than 14 percentage points above the developed country average of 24.6 percent and has contributed to the 28 percent decline in the number of U.S.-headquartered companies in the Global Fortune 500 in 2014 versus 2000. The long-run impact on the U.S. economy is equivalent to a reduction in GDP of roughly $235 billion to $345 billion each year. Moreover, the U.S.’s high corporate tax rate ultimately harms job creation and America’s workers.”
The tax rates Trump proposed for the individual income tax are charted below:
Looks good to us – all he needs to do next is replace the scalpel he’s taking to the federal government’s budget with an ax.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]