Trump's Tax Reforms: Promises Fulfilled After 3 Decades - Essay Sample

Introduction

The United States was operating and governed by a tax code for almost three decades. The incumbent president, Donald Trump, had promised in his campaigns that he was planning on reviewing the current tax regime and put in place a better one that will effectively serve the need of the people of America and the business environment as a whole (Hunt, 2017). Throughout the office, Trump has been keen to make due to his promises he had made to the electorate. The initial vision of Trump's tax reform is "Americans First," and the tax cuts he proposed are unmatched. Trump tax proposal calls for a sole top proprietor of 25% and the corporate rate at 15% according to Trump cutting down the cooperate taxes it will create substantial economic growth, and there will be a significant personal income. Analysts have argued that when comparing Trump's tax cut to President Reagan's 1986 Tax Reform Act, it will be perceived as the most comprehensive tax reform made in modern history. The essay will compare the Tramp tax cut of 2017against that of President Ronald Reagan tax cut of 1986.

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Ronald Reagan introduced the tax reform in 1986 that was supported by both two parties (Bradley, 2017). His tax reform improved simplicity, fairness and economic efficiency by expanding the tax base and lowering tax rates. Similarly, today's tax reform also has the potential to help American families and the economy. Properly designed tax reforms may help mitigate the sharp increase in inequality over the past 20 to 30 years, and it can repair corporate tax systems that are dysfunctional due to globalization, reduce uncertainty, and promote growth. Regrettably, according to our understanding of the intentions of the president and congressional leaders, they are likely to pursue the tax reform that has been the worst in U.S. history. Trump's tax reform is only beneficial to the 1% of the population with the highest income, but it can lead to an explosive increase in federal debt and has little effect on stimulating economic growth. In 1986, both Democrats and Republicans agreed that the tax reform should not lower the tax burden on high-income taxpayers (Bradley, 2017). To solve this problem, Reagan, while reducing taxes, raising capital gains taxes and reduced investment incentives, which strengthened corporate tax collection.

One other element of the Trump plan is worth noting: It would eliminate the federal estate tax and the gift tax. Although Reagan had made a significant change in his tax reform plan, he did not make any changes to inheritance and gift taxes, because the abolition of inheritance tax and gift tax may give the rich people more opportunities to avoid tax. The rich people can pass their assets to their children, and grandchildren use the form of gifts to ensure that their wealth will not be taxed. Some people may even make a profit from commercial activities in the kind of gift-giving without paying any taxes. It makes Trump's tax reform policy more conducive to the rich, and they will get more benefits from the tax reform policy. In the long term, the gap between rich and poor will be further widened, which also very easily lead to dissatisfaction with the middle class. Economically, tax cuts mean more deficits.

When Trump first proposed tax cuts, he stressed that tax cuts would promote economic growth. The most basic function of taxation is to raise state revenues. Such a tax cut should not be applied if the tax cuts affect the revenue required for the proper functioning of the government (The white house, 2017). Trump's tax reform plan not only make the rich people whose income grow fastest in the past few decades to enjoy the high tax relief but also means that the federal budget will be severely affected. Trump would like to follow Reagan's tax cuts. It is worth remembering that here we already have a lesson. According to Jagoda (2016), President Reagan's tax cuts did not follow the original direction, and in the end, the deficit widened sharply, and the government's debt was higher and higher. In the end, out of concern about the federal debt, Reagan found it necessary to raise taxes. This situation of the enormous financial deficit result from the tax cuts was not relieved until Clinton became the president. Therefore, whether Trump's tax cuts can promote the sufficient growth of the economy has to be questionable.

Conclusion

In conclusion, Although in the current view, Trump's tax reform has a lot of loopholes, as a businessman, Trump is most concerned about the impact of tax cuts on job incentives and the decline in capital costs. If everything goes according to his wishes, then it may lead to long-term economic growth, the United States may become more powerful. However, President Reagan's tax cuts did not achieve the desired results but increased the fiscal deficit. Therefore, we have to be careful about Trump's tax cuts.

Works Cited

Lewis, Nicole. "Did Ronald Reagan'S 1981 Tax Cut Supercharge The Economy?". The Washington Post, 2019, https://www.washingtonpost.com/news/fact-checker/wp/2017/11/08/did-ronald-reagans-1981-tax-cut-supercharge-the-economy/?noredirect=on&utm_term=.99029930b533. Accessed 7 May 2019.

Bill, Bradley. "Opinion | When Congress Made Taxes Fairer." Nytimes.Com, 2019, https://www.nytimes.com/2017/04/29/opinion/sunday/when-congress-made-taxes-fairer.html?_r=0.

Hunt, Albert R. "Why It's Been 31 Years since the Overhaul of the U.S. Tax System". Denverpost.Com, 2017, http://www.denverpost.com/2017/02/21/why-its-been-31-years-since-the-overhaul-of-the-u-s-tax-system/. Accessed 7 May 2019.

Jagoda, Naomi. "Five Challenges For Tax Reform." The hill, 2016, http://thehill.com/policy/finance/domestic-taxes/306849-five-challenges-for-tax-reform. Accessed 7 May 2019.

The White House. "The Legislative Branch." Whitehouse.Gov, 2017, https://www.whitehouse.gov/1600/legislative-branch. Accessed 7 May 2019.