The Trump Tax Plan

Trump Tax Plan = More money you keep
Photo – Royalty Free from Pexals


The founder of La Colombe (Todd Carmichael) recently wrote an op-ed for the Philladelphia Inquirer. In that opinion piece he stated that the effect of the tax bill was to guarantee fatter corporate bottom lines and that it does nothing for the employees.

His argument against the tax bill is wrong for several reasons.

Lower corporate taxes provide the means for companies to invest in other ventures and to finance expansion in existing ventures. It means more jobs. It means EXISTING employees in most circumstances (mergers, acquisitions, and mismanagement are not included) will get to keep their jobs.

The idea that profits flow back to employees is ludicrous and to frame the argument in those terms it is disingenuous. Lower corporate tax rates is NOT about turning that money over to employees, but to allow corporations (most of them small businesses BTW) to be able to expand, purchase capital equipment (a major part of the tax overhaul in terms of the dollar limits and the time frames to recoup that investment), and provide more jobs.

The United States has the highest corporate tax rates of the advanced economies in the world at 39.8%. Ireland who had previously held that distinction slashed it’s corporate tax rate to 12.5% a few years ago and business (AND JOBS) are flourishing as a result.

The other part of the tax plan speaks directly to the middle class in terms of their income tax and what they must pay to the government. We get a simpler code (less tax brackets if the House plan in adopted) and a lower tax rate. All sources from the Cato Institute to the CBO says that the middle class will benefit from these tax cuts and keep more of their income.

It also raises raises the amount or the threshold of when people are taxed. Meaning that many in the 10% bracket today will pay no income taxes tomorrow if the bill is passed.

This is a major overhaul of our tax system. And it will be good for the economy.

The La Colombe founder Carmichael doesn’t talk about are the benefits of an across the board tax cut for all. Merely that the corporate tax cuts included in the bill don’t directly affect employees. They do affect employees in terms of capital equipment need to do their jobs more efficiently; in terms of job retention and promotions; in terms of new jobs being created in new ventures and in terms of job training.

There are (according to the Census Bureau) 27.9 million small business in the United States. And 18,500 firms with 500 employees or more. Our own company which has three employees will benefit from the personal tax cuts as the profits from our S-Chapter company flow directly to the owners (myself and my wife) as personal income. So while we won’t benefit from a corporate tax cut, we will from the capital equipment write offs and other parts of the tax bill including the personal income tax cuts.

Carmichael states that And I can tell you what no other CEO wants to tell you: Casey [sic: Senator Casey] is right when he says that a half-trillion dollars of corporate tax giveaways proposed by the GOP aren’t going to do a thing for the middle class, or create a single job. That statement simply does not tell the entire story of the tax cut and makes the erroneous assumption that a corporate tax cut means higher wages for existing employees. It could, but it could also mean a brighter future and better place to work in the future due to the investments a company can now make in their employees.

Sources cited:
The Philladelpia Inquierer:
http://www.philly.com/philly/opinion/commentary/gop-republican-tax-reform-bill-la-colombe-todd-carmichael-20171128.html

National Public Radio NPR
https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world

 

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