Donald Trump. The President of The United States of America. Your President. My President. If you voted for him, congrats. If you didn’t vote for him, it’s time to accept the results and move on. Personally, I preferred the guy who had zero chance of winning and didn’t know what Aleppo was (good effort, Gary), but here we are. The guy from TV with the hilarious twitter feed is now our leader. As absurd as this entire election process has been, I’m genuinely optimistic and excited to see what the Trump administration is able to accomplish.
As a 32-year-old family man and business owner, I was curious to gain a better understanding of Trump’s proposed tax code changes. I was pleasantly surprised to find out that his plan will likely have a positive impact on my family and my business. It also appears that his proposed changes will be GREAT for most Americans.
Essentially, Trump plans to reduce the number of brackets from seven to three and lower the effective tax rates for everyone. Lower taxes and a simpler tax code are two things I can get behind. Here’s what the individual tax brackets might look like if Trump’s plan gets approved.
Trump Brackets & Rates
Trump’s plan also specifies that “Low-income Americans will have an effective income tax rate of 0,” though he does not provide specific numbers. We’ll just have to trust TOTUS on this one.
According to the Internet, the typical American can expect to save ~$1,000 per year on their taxes under Trump’s plan. This means most people will be afforded the opportunity to pump an extra G back into the economy via reckless spending on unnecessary consumer goods instead of trusting the US government to spend this money for them. As a businessman who operates a company that sells non-essential consumer goods, I’m all for it. $1,000 will go a long way at ManOutfitters.com (#spon).
Additionally, Trump’s plan will lower the corporate tax rates to a flat 15% on all profits retained by a corporation and held in the USA. Presently, American corporations pay 15% on all profits up to $75,000, then 35% on all profits above $75,000. Under the current structure, a corporation that profits $1,000,000 will owe $335,000 in cash to the government at the end of the year. Under Trump’s plan this same company will only pay $150,000 in taxes.
The caveat to the big bad corporations is that Trump plans to penalize companies that hold profits overseas in tax safe havens to avoid paying the absurdly high American corporate tax rates. In fact, the US corporate tax rates are the third highest in the world, surpassed only by the United Arab Emirates and Chad. Fuckin’ Chad. By lowering the tax rates and creating these new penalties, most American-based corporations will lose the incentive to book profits overseas. Theoretically, this would move a ton of cash back into the US and prevent future profits from going overseas.
As an economic and political novice, this makes sense to me and sounds like a good plan. However, this is a very simple overview of the potential changes and their effects. If you’re interested in digging a little deeper into some of the potential issues with Trump’s plan here’s a decent article from Forbes. If any of you readers have deeper insights, feel free to hit us with your knowledge in the comments section..