Democrats and liberals may have used their itchy trigger finger hastily and shot themselves in the foot over GOP Tax Reform legislation.
Contrary to the mainstream media and left-wing zealots decrying it as favoring the rich and killing the middle class, many wealthy Americans could actually be getting stiffed under the new reforms.
As President Donald Trump repeatedly emphasized, the pair of bills that are headed to reconciliation before arriving on his desk are focused on reform and economic growth. That subtlety may have been lost on Democrats that are accustomed to a Pavlovian response to all things conservative.
What Trump may be shining a light on are aspects of a flawed, but substantial tax policy that rewards businesses more than wealthy entrepreneurs and moguls. In fact, here are some of the ways that millionaires and billionaires may have to plunk down additional tax dough after Trump signs the landmark legislation.
The Hidden Millionaire Tax Hike
Those earning more than $1 million per year may no longer be able to enjoy a 12 percent take rate on the first $45,000 they take home. That minor nuance was initially highlighted by the left-leaning Politico, but didn’t receive significant headline billing in the mainstream media.
If that nuance remains in the final legislation, top earners would be subject to the 39.6 percent rate the GOP-led law seeks to maintain. In a nut shell, Trump’s signature would cost top earners approximately $12,400 dollars. Some of the other tax hits on the wealthy that have been wrangled over things that include “like-kind exchanges.” These make expensive artworks tax deductible.
Wealthy Homeowners Will Take A Hit
Given that both the House and Senate bills plan to address limits on mortgage interest in some fashion, it’s likely the threshold will change. The House touts $500,000 as the property value limit while the Senate seeks to keep it a $1 million. A compromise anywhere between those figures will result in high earners losing part of their mortgage interest deduction.
The impact on the seemingly wealthy may be subject to regional wealth distributions. As reported by Forbes, the states with the highest percentage of homes valued over the $500,000, and $1 million would see their taxes go up. The statistics also trend toward these well-off homeowners residing in primarily Blue States.
These are the top 5 state percentages of $500,000 homes followed by $1 million properties:
Hawaii: 63 percent vs 13 percent
California: 49 percent vs 14 percent
Massachusetts: 28 percent vs 5 percent
New York: 27 percent vs 7 percent
New Jersey: 23 percent vs 3 percent
Both the House and the Senate appear to agree that the monetary deduction limit should be placed at $10,000. The states with the greatest number of tax-filers in excess of that threshold are Connecticut, New York and New Jersey. It appears Democrats voted “no” to protect their wealthy constituents.
Regardless of how hard the screaming left wants to claim the tax reform legislation attacks poor and middle-income families, home ownership above $500,000 or $1 million would be considered quite comfortable by much of the country. The reality of the mortgage tax deductions will be that the comfortable and wealthy pay more.
Cutting The Corporate Tax Rate Favors Working Class
Both the House, Senate and White House are in agreement that the corporate tax rate should plummet from 35 to 20 percent. Few dispute the fact that America has not maintained tax rate competitiveness with other countries.
According to the Tax Foundation, the United States ranks as the fourth highest in terms of taxing corporate earnings (38.91). Only the United Arab Emirates, Comoros and the U.S. territory of Puerto Rico are worse. Europe, one of America’s direct business competitors, enjoys the lowest business taxes at 18.35 percent. Yes — American businesses pay more than double in corporate taxes than they do across the Atlantic.
While the GOP plan would almost level the playing field, the tax benefits won’t be fully enjoyed by wealthy business owners and stock holders. The Republicans have effectively stiffed the rich by holding fast on the top bracket of 39.6 percent and sticking them with the additional $12K previously mentioned.
That little nuance means that business profits may be better served through reinvestment. Pocketing the windfall means turning 39.6 percent of it over to the government. Expanding businesses will lead to new jobs and spur economic growth. Business owners may be chomping at the bit to get the tax break. However, their increased wealth will more than likely be realized in assets and on paper instead of cold hard cash.
~ Conservative Zone