GOP Tax Plan :
President Trump’s “big beautiful Christmas present” failed to please critics. Earlier this month, the President of the United States announced that his government is working on giving American people a tax cut. According to the Republican Party, the tax plan will help small businesses and create more jobs, but the party has started seeing the protest from its own people. Senator Ron Johnson came out and said he can’t vote for the bill until the government plans to make some necessary changes.
Johnson says the GOP Tax Plan will benefit big corporations, as the top corporate rate would be slashed from 35 percent to 20 percent. He says that because of the new GOP tax plan, many small businesses would be paying at a rate of 25 percent. He is the first member of the GOP who expressed his disappointment with the proposed version of the bill. Johnson is hopeful that he will work with his colleagues and “address the disparity”.
The 62-year old Johnson is not alone who is against the GOP tax plan. Many analysts and tax experts believe that the bill is going to hurt more than 30 million businesses. When the government is trying its best to convince people about growth in job rates, small firms are fearful about the implementation of the bill. Americans believe that this is going to hurt the local economies because small businesses are the backbone of many communities. Asking small businesses to pay more tax will be wrong and it will cut jobs.
The Small Business Administration calls the GOP tax plan “toxic”. The community says that small businesses are responsible for creating two-thirds of new jobs and hitting them hard with a new tax plan will leave a negative impact on job creation. If small businesses will be asked to pay more tax to the government, they will not be able to hire more people. As a result, the rate of unemployment will go up. When finding work will become difficult for people, they won’t be able to start a new business because running a business in such conditions will be as difficult as finding a job.
Under the initial GOP tax plan, the majority of the poorest Americans would not see any major changes in their tax bills. The GOP tax plan takes away the programs that genuinely help small businesses. The government is also changing the rules on pass-through income. According to the government, it will boost the creation of new jobs and lower the tax rate to 25 percent. But the catch here is if you are making more and paying more tax, you will get benefited, but it doesn’t really mean that the plan will help all the small-business owners.
While many businesses are pass-through businesses, some major firms also fall under the same category. Businesses like real estate firms, investment firms that make enough money and pay high marginal rate will also start paying 25 percent which is less for them. If your small business is earning somewhere below $100000, which is the reality of most of the small businesses today, you will also be paying at the same 25 percent rate. Overall, the tax reduction is not going to help a large number of small business owners.
The National Federation of Independent Business has also criticized the new tax plan. In a statement published by WSJ, the NFIB President Juanita Duggan said that the bill leaves small businesses behind. The lobby said that it is unable to support the bill. John Arensmeyer, CEO of Small Business Majority said that nearly nine out of ten businesses are already paying 25 percent rate or less than that. He said that the GOP tax plan would help wealthy business owners but it would fail to help small businesses.
Research shows that hiring and retaining quality employees is the top concern for businesses. A large number of small businesses are interested in hiring more people, but there are many business owners who are having a tough time filling the open positions in their organizations. The unemployment rate has gone low this year, but with the new GOP tax plan, small business owners are unable to accept the changes and most of them believe that hiring people will become more difficult for small business owners.
With the new tax plan, Republicans also want to change, cap or end many write-offs in the tax code. There would be changes in the charitable giving, mortgage interest, and education loan. The GOP is trying to convince people by saying that most of the people will not need deductions as the government is lowering down the tax rates. Democrats on the other side say that the new bill is a simple setup to help big businesses by cutting down the benefits for the middle-class and the lower-middle class.
It seems Republicans are in the mood to use the special Senate budget rules through which they will be allowed to pass a number of tax measures with 51 votes. It means that some of the changes can be effectively brought in place by avoiding the need for 60 votes. The 52 Senate Republicans would not need Democrats to pass a change in the tax. When no one from the Democratic Party is expected to vote for the bill, it will be hard for Republicans to maintain unity among its Senators. If the party wants to quickly pass the bill, they will need all of their Senators to vote in favor of the bill.
Tax experts like David Cay Johnston have criticized the move by saying that “Trump has turned Washington into a federally protected wetland for big, established business and comfortable billionaires.” He said that Republicans are targeting those who have formed the core of the Grand Old Party constituency. He reminds Republicans saying that in Lincoln era, the party used to help entrepreneurs and small businesses by promoting tax benefits for anyone who wanted to start a business.
Taxes are always complicated because people want the tax code to help them a lot. The expectations are high and there’s still a lack of communication from both the sides.
Image Credits To : Michael Vadon