Huge Costs for Little Benefit to Home Business Owners
By Richard Henderson, Publisher, Home Business Magazine
I am thumbs down on Trump’s tax reform plan (currently known as the Tax Cuts and Jobs Act); which is currently winding its way through Congress. Trump’s tax plan will regressively slash taxes primarily on the wealthy, significantly increase our deficits and national debt, and threaten our nation’s credit rating and national security. These large costs for Trump’s tax reform plan will not significantly increase demand for home-based business goods and services. Responsible growth projections are well under one percent.
Here are 4 key reasons for why I oppose Trump’s tax reform plan:
Trickle-Down Regressive Tax Cuts: Nearly 60% of the total tax benefit* will go to the nation’s top 1 percent (few of whom operate home businesses), while taxes will likely rise on lower income levels (many of whom DO operate home businesses). Trump’s tax plan even rolls back the Estate Tax, which benefits only the super-wealthy and few home-based business owners. There is NO evidence that regressive tax cutting trickles-down to increased small business demand and activity; the cuts will, however, further widen already corrosively high wealth gaps, and will significantly increase our nation’s annual fiscal deficit.
Staggering Increases to National Debt: Trump’s regressive tax cuts will increase the national debt by an estimated $1.4 trillion over the next decade, and likely more with additional tax giveaways under consideration. This is in addition to baseline national debt increases as annual deficits soar above $650 billion in 2017, already on trajectory to $1 trillion per year by 2020. Within 10 years, the national debt could swell above $30 trillion This is simply unsustainable, and threatens our country’s economic – and national – security. The growing national debt decreases capital availability for small businesses, and increases the risk of a demand-killing economic downturn.
Risk of a Credit Rating Downgrade: Moody’s Investor’s Service could threaten to downgrade the U.S.’s AAA credit rating, due to the Trump Tax plan tax cuts not offset by equivalent cuts to spending. This credit negative outlook risks increasing interest rates on the $20+ trillion national debt, driving up interest payments, which will push annual deficits up even further. A perfect economic debt storm, that could further raise interest rates for small business owners.
Voodoo Economics, Again: The Trump Tax reform plan brings back the ghosts of voodoo economics, where through mystical schemes like “dynamic scoring,” tax cuts magically return lost tax revenue (the National Bureau of Economic Research estimated that only 17% of income tax cuts are dynamically returned in increased tax revenue). Historically, deficits have increased substantially after tax cuts. The national debt is now pushing past $20 trillion. We simply cannot afford the risk of once again throwing out fiscal responsibility for scented candles and voodoo stick pins.
Overall, the increased funding freed up by all this costly new debt in Trump’s tax reform plan will not translate into significant new growth nor demands and opportunity for home-based business owners.
Parts of Trump’s tax reform plan would be favorable for home businesses, such as simplifying deductions, reducing corporate tax rates, cutting some taxes on small businesses, closing loopholes, repatriating overseas income, simplifying the tax code, and more. But achieving these goals in such a regressive tax-cut-deficit-increasing manner puts me “thumbs down” on Trump’s tax plan.
A better approach for small business would be a comprehensive, bi-partisan tax plan that simplifies the tax code, is REVENUE NEUTRAL, encourages investment, and provides tax cut relief targeted to middle and lower incomes. This increases disposable incomes for middle America, helps stimulate consumer confidence and main street demand, that grows us from the middle out.
This is what home-based business owners need! Not a massive fiscal sugar high that puts our country’s security at risk.
Thanks for reading! Do you agree or disagree? I welcome your feedback. Please log in through social media and post your comment. If you disagree with me, I will reply back!
* Non-partisan Tax Policy Center
