Within the last week, the Republican plan to overhaul the current taxation policies of the United States has been gaining some ground. The overall goal of the tax plan is to augment investment and significant job growth through traditional trickle-down economics. However, as we have learned in the past thirty years, trickle-down economics has yet to yield any significant economic success. While the current tax plan is robust, there are many negatives and downsides to the proposed bill that would significantly hurt lower and middle-class families while benefitting the wealthiest of Americans.
To begin with some broad aggregate information, those in the lowest income brackets under the proposed tax plan would save roughly $700 in taxes annually on average, whereas the wealthiest tax bracket stands to receive roughly $30,000 annually. This tax cut is more of a benefit to the wealthiest Americans while the middle and lower classes are forced to support more of the burden. These tax cuts would remove over $1.7 trillion in Federal revenues, which drastically lowers the capabilities of the United States to cover significant government services as well as the US' ability to pay the interest off of its debt.
In fact that debt question may put the bill in jeopardy.Under Congress' own laws, if a tax bill were introduced and passed in both Houses, that bill could be considered illegal if the ramifications of that bill would significantly decrease the US' ability to pay off the interest on its debt. In other words, if the US loses its ability to pay its debt and defaults on its outstanding loans overseas then this would spell financial ruin for the US and the rest of the global economy. Basically, that legislation was enacted in order to prevent an economic catastrophe across global markets and to ensure that the United States continues its efforts to reduce the national debt.
However, the most important facet of this bill is the fact that it is currently gaining traction in Congress without regard for the financial and economic consequences it will have in the long-term. To begin with, many of the repealed taxes mostly support the rich and wealthy Americans and these repeals only affect the top 0.2% of Americans. Most of these tax cuts are aimed at consolidating wealth in the hands of the 1 percent and keeping it that way. Corporate tax rates would plummet and as a result regulations over corporations would plummet as well, leading to riskier business models and practices. that will ensure the loss of jobs rather than the creation of new ones.
