By former USDA Secretary John R. Block
The Holiday season is here. Amazing – Tax reform legislation has passed, and President Trump has said he will sign it. That is a big Christmas present.
President Trump and Republicans in Congress got it done without any Democratic help. Before President Trump was elected, Democrats -- including President Obama -- wanted to cut the corporate tax rate, but they couldn’t bring themselves to vote for the Republican bill that cuts the rate. Critics of the bill had the main stream media as their attack dog. Now we will see, as it goes into effect, if the voters like it or not. I know that small businesses, farmers, and ranchers are supportive. The tax rate for partnerships and sub chapter S Corporations will be reduced. The estate tax exemption will double. That will protect family businesses.
Critics of the bill argue that the rich get big tax cuts. Well, some of them will, but not all. Some in the east and west coast cities, where they have a high level of state and local taxes, complain that since the bill limits the deduction of those taxes, they will pay more. But those are the rich people anyway.
Here is the best estimate when the new tax package is in place 1). The top 20% will pay 65% of the taxes. 2). The top 5% will pay 50% of the taxes. It looks like the rich will be doing their part. Chris Edwards, of the Cato Institute, found that those making $40,000 - $50,000 would see their income taxes reduced by 51% by 2019. Individuals making $50,000 - $75,000 would see a 24% reduction. That’s a tax cut for the middle class. Opponents of the bill have been telling us that it “will raise taxes on the middle class.” Well, we shall see.
I am quick to admit the tax legislation is not perfect. I am concerned that the tax package is predicted to add 1 trillion dollars to our national debt over the next 10 years. At the same time, I believe letting individuals and businesses keep more of the money that they earn is a good thing. They can use the money to build the economy and create jobs.
John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill. If you would like to review his radio shows going back more than 20 years, visit johnblockreports.com.