One of Donald Trump’s main selling points during his presidential campaign was a revised tax plan. As a conservative front runner, Trump proposed to reduce taxes for small and large businesses alike. Wealthy business owners were strong proponents of this reform and supported Trump in the process. On the contrary, many democrats and dissenters were critical of Trump’s tax reform fearing that it would increase the gap between the wealthy and poor.
Having won the election, President Trump has begun laying out the policies of his tax reform. As many people feared, this tax reform includes a proposal to reduce the top tax rate for some major companies such as the Trump Administration. More specifically, Trump is attempting to cut the top tax rate for “pass through” businesses. Typically, high-level business owners pay two different kinds of taxes. The business overall pays a tax rate and then the individual owners must pay income taxes. However, there are some “pass through” businesses that qualify to opt out of paying the corporate rate. Instead, the earnings are divided amongst the business owners and it is taxed through a standard income tax.
Currently, the corporate tax rate is at 39.6 percent. Trump’s proposed tax reform reduces this number by more than half to just 15 percent. One of the major questions regarding this proposal is the benefit that the Trump Administration would gain if enacted. Despite handing his lucrative real estate company to his sons, President Trump will always be associated with the business.
Many critics don’t think the President should be able to make economic decisions that would benefit his own company. Furthermore, these proposed tax cuts could add an extra $150 billion per year to the federal deficit. During the 2016 fiscal year, the federal deficit was already at an appalling $587 billion. Most likely, Trump’s tax reform requests won’t be able to be passed under Congressional reconciliation rules. Instead, these reforms will require Democratic votes in order to gain Senate approval. However, President Trump will receive a lot of scrutiny from the Democratic party regarding his proposed tax reform policies.