Truthful News

Tax Reform: Is It Working?

America Daily with Arleen Richards

0 175

Tax reform arguments have existed since the American government began taxing the colonists in the 1700s. Despite many changes, taxes remain a common issue among politicians. Today we discuss tax reform and the 2020 election.

Today’s Guest:

How Has Tax Reform Impacted Americans?

Today’s guest, Nicole Kaeding, discusses the Tax Cuts and Jobs Act (TCJA). Nicole said the Tax Cuts and Jobs Act of 2017 was historic because it was the first time tax reform was done at the federal level in a generation.

The first tax-filing season under the Tax Cuts and Jobs Act just passed; what impact did it have on Americans?

We just concluded the first filing season. Here are a few things we do know: In 2018, 80 percent of Americans saw a tax cut; only 5 percent saw a net tax increase. — Nicole Kaeding

Nicole Kaeding: I think, if you read many stories, you would have gotten a very different sense than those figures. The remaining 15 percent, for those that are doing that math in your head, those are individuals who had no notable change in their tax liability, meaning it didn’t change more than plus or minus one hundred dollars.

For people who were surprised or upset by this year’s tax refund or bill, what advice would you give them for next year?

Nicole Kaeding: Once you finish your tax return for 2018, if you go on the IRS’s website and you search “withholding calculator,” the IRS will ask you a few questions based on the information on your tax return as well as your most recent pay stub. And they’ll tell exactly what to put on the W-4 that you give to your employer. So you can update that for your employer and that will adjust the amount taxes that are withheld from your pay check every two weeks when you get paid.

Taxes and the 2020 Election

Are wealth taxes a new idea? And are they popular in other countries?

Nicole Kaeding: Wealth taxes are an old idea, actually. It’s a new idea that Senator Warren is proposing, but they’re an old idea. They’re actually a tax that has been used in other countries. And the lessons of those other countries is that the taxes are quite problematic. If we look at countries within the OECD, meaning the industrialized world, a number of these countries had wealth taxes in the early 1990s. There are now only four countries in the industrialized world that have these.

I think, in general, we put too much weight on the president’s role in the economy. I think the president has some influence in the U.S. economy, but I don’t think the person who occupies the White House is the sole determiner on which direction economic growth will go in. — Nicole Kaeding

How would proposals by the Democratic presidential candidates affect the U.S.?

Nicole Kaeding: Let’s talk about Representative Ocasio-Cortez’s 70 percent marginal income tax rate. She’s not running for the Democratic nomination for president, but she obviously has had an outside role over the last several months. We need to think about taxes based on what incentive do they create on individuals or businesses.

What we estimated, when we looked at her proposal, is that you would actually not generate nearly as much revenue as you’d think. Part of that has to do with the fact that income for very wealthy individuals is not the same kind of income that you and I have. You and I get most of our income from our wages.

For the very affluent in the United States, most of their income actually comes from what we call capital gains, meaning from the stocks, the bonds, the businesses, the assets that they own. We only tax capital gains when they’re realized, meaning that if I have a share of stock and I hold that share of stock for a couple years and then it increases in value, I only pay taxes when it’s sold … If I’m a high-income individual, I’m going to have a very large incentive not to sell my stockholding.

Most Americans agree the economy is doing well under President Trump; is that because of Obama’s policies, luck, or President Trump’s economic policies?

Nicole Kaeding: Obviously, since the great recession, the U.S. economy has been growing. Some folks argue–and there is a bit of credence to this–the trends we’ve seen since President Trump was elected to office are continuations of trends from President Obama’s term. I do think the policies the Trump administration has enacted are pro growth, like the Tax Cuts and Jobs Act. I think there have been other policies from the Administration that are more concerning in terms of economic growth, such as the president’s actions on tariffs, I think that those are actually anti-growth.

Press play to listen. What was tax season like for you this year? Any surprises?

Leave A Reply

Your email address will not be published.