Wednesday, April 26, 2017

Tax plan

When state pension funds get to the point where they are underfunded they often times just increase the expected rate of return on their investments and that solves the problem. This has been going on for years and now the Trump tax plan will use the same mechanism to pass his tax plan. Since the democrats are committed to oppose any plan that Trump proposes the only way to pass a tax plan is through the reconciliation process. This means it must be part of the budget process and must be revenue neutral and is thus able for passage with a simple majority and can therefor avoid the senate filibuster. To make it revenue neutral the expected increase in the GDP caused by the tax reduction is adjusted accordingly just like what is done with pension plans.

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