Originally published October 10 2015
Donald Trump to make offshore corporations pay tax under new plan that eliminates taxes on millions of working Americans
by J. D. Heyes
(NaturalNews) GOP presidential frontrunner Donald Trump has just released his tax plan and it is sure to please a great many Americans — millions, in fact.
As reported by The Wall Street Journal, Trump's plan to tax U.S. corporations that relocated offshore is being hailed by many as a step in the right direction.
If elected, Trump says he will push a plan that eliminates income taxes on millions of households and lowers the tax rate on all businesses to 15 percent while changing tax treatment of corporations' overseas cash holdings.
Under the plan, individuals earning less than $25,000 a year would not have to pay income taxes, and neither would families earning less than $50,000 annually. The Trump campaign has estimated that the plan would reduce federal income taxes to zero for about 31 million households currently paying income tax. Under the plan, the highest rate individuals would pay would be lowered to 25 percent, down from the current level of 39.6 percent.
"Many middle-income households would have a lower tax rate under Mr. Trump's proposal, but because high-income households generally pay income tax at much higher rates, his proposed across-the-board rate cut could have a positive impact on them, too." WSJ reported.
By comparison, the business-supported Tax Foundation's analysis of former Florida Gov. Jeb Bush's offered tax plan — who proposes taxing individuals at no more than 28 percent — found that the largest group of winners in after-tax income would be the wealthiest 1 percent.
"Corporate America, bring your money home"Trump's plan looks to solidify his status as a populist candidate, though some think that this view might be sullied because Trump, like other Republicans, wants to eliminate the estate tax altogether (what many call the "death tax" because it is levied against the assets of an estate — assets for which the deceased has already been taxed, repeatedly in some cases).
"My plan will bring sanity, common sense and simplification to our country's catastrophic tax code," Trump said in an interview. "It will create jobs and incentives of all kinds while simultaneously growing the economy."
As you might expect, there are critics and skeptics of the plan. Many are claiming that his cuts cannot be implemented without adding to the federal deficit — a baseless argument given the former Bush and current Obama administrations' adding to the deficit at higher tax rates. For his part, Trump says lowering rates will create more jobs and generate more overall tax revenue.
Nevertheless, to pay for the cuts, Trump would eliminate or reduce deductions and loopholes for high-income earners. Also, the plan seeks to reduce some deductions and other tax breaks for middle-income earners by capping the level of individual deductions — a proposal that is likely to face stiff political opposition.
The Trump plan would also end the "carried interest" tax break, a hit on wealthy hedge fund managers. Current tax law allows them to pay lower taxes on much of their income.
Still not enough?The plan would see a significant revenue increase by implementing a one-time repatriation tax of 10 percent on any corporate revenue brought back into the country. Currently, U.S. corporations are holding about $2.1 trillion in cash assets overseas. Trump's plan aims to encourage those corporations to repatriate that money to the U.S., where they could use it to expand operations and create jobs, as it would tax those assets whether they were brought back to the U.S. or not. Also, the plan would allow for corporations to pay the tax over the course of a few years.
The WSJ further reported:
"Mr. Trump also would impose an immediate tax on overseas earnings of American corporations; currently, such tax payments can be deferred. All told, the campaign says the plan would be revenue neutral — neither raising nor lowering federal revenues — by the third year and then begin adding revenue."
The release of the plan was meant to quiet Trump's critics who argue that his campaign has been more about style and less about substance. Looking at his tax plan, however, it seems that his policy is bound to resonate with a great many voters.
For the record, the U.S. government took in a record $2.8 trillion in revenue last year, and it still wasn't enough; the government finished its fiscal year with a $530 billion deficit.
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