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First Word: Trump tax plan hurts small business

     Within his first year of presidency, Donald Trump has not been able to keep up with many of his campaign promises. Currently, he is working on following through with one of the largest tax cuts in U.S. history, which was part of his pledge to the American people before the election.
The question is, who is truly going to benefit from this tax reform? Word on the street is that large corporations, as well as the one percent, will see the largest benefit, while microscopic benefits are distributed to the people that need it most. I thought Trump was supposed to be an advocate for the average hardworking American?

     The Tax Policy Center released an analysis of Trump’s new tax code, and the findings and predictions were a little unsettling. Tax Policy Center states, “Those with the very highest incomes would receive the biggest tax cuts. The tax cuts are smaller as a percentage of income in 2027, and taxpayers in the 80th to 95th income percentiles would, on average, experience a tax increase” (taxpolicycenter.org). If you feel any disappointment now, just wait for the rest of it.

     S corps and sole proprietorships are businesses that are small in scale and usually are owned by the middle class. Originally, S corps and sole proprietorships were taxed at the personal income tax rate of the owner. However, the new tax code will now tax those incomes at 25 percent. If we look at the new income bracket proposal (three income brackets of 12, 25, and 35 percent), the middle class is taxed at 25 percent. With the condensing tax bracket, this only depresses the discretionary income of small business owners that currently have a personal tax rate under 25 percent (Bloomberg).
Trump’s new plan strays from what he talked about during his campaign because it is bad for small business owners who earn a lower income. The bottom 20 percent will also only be making 60 dollars more on average under the new tax plan.

     I have a family member, a Trump supporter, who actually owns a small S corp. They voted for Trump under the impression that there would be tax changes that would truly help. After all, Trump is a businessman and supposedly understands the hardships of small business owners. Sadly, this tax proposal is not going to help at all, but in fact damage their business.

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     We always hear that tax cuts for the rich are what make the world go ‘round. I continuously hear the weak argument that, “rich people create jobs,” but in reality, rich people do not create jobs. Demand for products and services create them. If there is less money flowing into the pockets of the middle and lower class Americans, then demand for products and services decreases.

     With a status obsessed and materialistic billionaire in the president’s seat, I expected nothing less than a tax reform like this.

     Many people are reminded by the Reagan tax cuts under his “trickle down” theory for economic growth. People left and right on the spectrum have criticized this theory because of its effects on income inequality and how it tends to reduce overall GDP. People always talk about how Obama made the national debt rise, but let us not forget that Reagan skyrocketed the U.S. national debt close to three times higher than it was originally. Since revenue did not match the predicted expectations under Reagan’s term, he then had to implement plans to raise taxes significantly.
Will the U.S. national debt continue to skyrocket along with the rich getting richer and the poor getting poorer? So far, I do not see any way that this tax reform will go through, but if it does, then we are sure to be in serious long-term trouble.

Chloe is a senior Anthropology and German major . She is the BU Democrats Communications Coordinator and German Club Secretary. She is a staff writer for The Voice

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