Start the conversation
The responses to last week's "Why Trump's Tax Plan Is a Slap in the Face to the Middle Class" were incredible and thought-provoking… Many of you agreed with my position, and many didn't, but just about everyone had something useful and intelligent to say.
Today, I'll address a few that left me eager to respond.
Q: I read an article explaining that Trump's corporate tax plan is all a bunch of smoke and mirrors as well. The average S&P 500 company pays an effective tax rate somewhere between 10-20% (rough numbers as I don't remember the exact number). With all the loopholes and deductions, they pay nowhere near the 35%. So, basically, the premise was that lots of businesses will actually see tax increases.
It all goes back to the fact that Trump misrepresents just about everything he talks about. He is as big a liar as the rest of the politicians. It will be interesting to see how long it takes the masses to catch on… – SS
A: It's not fair to say the president's business tax plan is all smoke and mirrors. We haven't seen it fully fleshed out.
I believe we agree the so-called 35% top corporate rate isn't paid by many, because with deductions, credits, etc., their effective tax rate is about 14%.
Lowering the rate to 15% I think is too aggressive right out of the gate. Because the wealthy own most of this country's big producing assets (corporations) and manage them for exorbitant compensation (including stock options), it makes more sense to lower the corporate tax rate to a flat 25% while eliminating most deductions for two years starting in 2018.
Then, we lower it to 20% in 2020, then to 15% in 2023. Also, it makes sense to graduate the tax rate based on net profit. If we want to be fair to small businesses and startups, their tax rates should be lower and increase as they hit net profit milestones. That's essentially the same proposition as lowering the burden on individuals who don't make a lot. It makes business sense to let small and growing businesses keep more of what they make to hopefully expand.
Q: I agree with you, Shah, but as a middle class taxpayer with no children and relatively normal investments, my main desire is ACTUAL tax simplification. Why do I have to spend several hours a year figuring out how much I owe or how much of a refund I should get? I should get a bill or a credit notification from the federal government, along with a form allowing me to add or subtract things that are not reported or have been reported incorrectly, and changing the total accordingly. THAT would cut the budget for the IRS to nearly nothing. Frankly, if the amount is not completely out of line, and I agree with what the government records…
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.