Many critics of President Donald Trump are strongly against his tax plan eliminating some of the taxes that the nation’s wealthiest citizens currently pay. Nearly three-quarters of polled Americans believe that the rich should be paying even more taxes, according to a poll conducted by Reuters and Ipsos.
The Republican plan, which was released about two weeks ago, has drawn criticism from billionaire investors such as Warren Buffett and investment bankers such as Larry Fink, chief executive of BlackRock Inc. Fink and Buffett both believe that the corporate rate cut need not be as deep as the plan proposes. Fink, in particular, called for a cut in corporate tax rate from 35 percent down to 27 percent, which would serve two purposes: provide tax relief for American businesses and avoid a federal deficit increase.
The tax plan put forward by the Republicans last month proposes a rate cut to 20 percent, which Fink says is “a pretty large expansion of our deficits.”
Trump has said that the proposed plan would be “a miracle for the middle class,” adding that it would create a better tax climate for US businesses and act as a catalyst for economic growth. Experts, on the other hand, hold that it would make for uneven tax relief, put a greater burden on the budget deficit and even be a boon to the very wealthy in certain cases.
Data from Washington-based nonprofit organization, the Tax Policy Center, shows that people in the top 1% income bracket making in excess of $730,000 a year would see their after-tax income increase by 8.5 percent, on average.
That goes against what 76% of American adults believe: that the wealthiest should pay higher taxes. While 53% strongly agree with this, another 23% somewhat agree.
It’s clear that more than half the nation’s taxpaying population – extrapolated from the Reuters/Ipsos poll – strongly wants the richest Americans to be subject to higher rates.
In all, the plan contains about $6 trillion in tax cuts, which is why there are serious concerns being raised about the deficit load on the federal budget from several deficit hawks. Trump and members of the Republican party are hoping to offset that by broadly eliminating breaks, loopholes and deductions, while simultaneously boosting annual economic growth.
Buffett and Fink have also come out against other aspects of the tax plan, such as repealing the 40% estate tax on assets worth in excess of $5.5 million per individual or $11 million per married couple. They are of the opinion that it would be “a terrible mistake” that would unnecessarily benefit the richest in the nation.
Fink also addressed the proposed elimination of state and local tax deduction, a move that is already being opposed – even by Republican lawmakers – in high tax states like California and New York, where the deductions help pay for public education and social programs. According to Fink, the new legislation is not likely to pass if it includes such an elimination.
“I don’t believe we’re going to get tax reform if there is the elimination of deductibility of state and local taxes.”
However, there are signs that there could be a compromise, based on discussions between House of Representatives Ways and Means Committee Chairman Kevin Brady and a dozen or so House Republicans and a few New York lawmakers at a dinner earlier this month.