Taxes

The Trump corporation tax cuts in 2017 lowered the rate from 35% to 21% and increased depreciation schedules on most new purchases. The plan doubled the standard deduction and doubled the child tax credit which lowered the taxes for most people. The change in corporate tax started the ball rolling as deglobalization came into play. In addition Trump placed import taxes on Chinese goods which further encouraged new plant development in the US. Biden continued the import taxes and added more while passing the Chips Act which gave tax incentives for US companies to bring manufacturing back home. The US must double its industrial base over the next ten years to be able to produce here at home all of the products it has been importing from China and other countries. If Trump is elected he will renew the 2017 tax cuts which are due to expire at the end of 2025. In addition Trump has now proposed reducing the corporate tax to 15% for companies that manufacture and sell inside the US. He also will remove taxes from TIPS and on social security benefits and taxes on overtime pay and increase the child tax credit to $5,000. These changes will basically remove income tax from working people. As these people get the new high paying jobs that are coming with new manufacturing jobs they will spur economic growth with their newly freed up tax free income. While the upside to this is a booming economy the downside is high inflation for about five years while production catches up with demand. Example. John police officer earns $70,000 plus $10,000 overtime Mary waitress earns $35,000 which includes $30,000 in TIPS. Under current law this couple pays $6,700 in taxes. Under the new law they will not only not pay taxes but they will get a $5,600 refund. This puts an extra $12,300 in their pockets. Example. Jack age 65 retired gets $3,000 per month from SS and Jill his wife age 65 gets $1,500 per month. Jack has a pension of $3,000 per month and Jill has pension of $1,200 per month and they take out $4,000 per year from their IRA. Their total gross income is $108,000 and the pay $5,500 in taxes. Under the new law they will pay $2,400 in taxes.