Less than a year into his presidency, Donald Trump is making huge strides to reform the taxing system, for better or for the worse. In his new plan, President Trump plans to cut down the tax for corporations and small businesses across America, all while maintaining higher taxes for wage earners. With this new plan, Neil Irwin, the senior economics correspondent for the New York Times, believes that many loopholes are going to be involved. Irwin argues that Trump's new reform policy will benefit high end corporate moguls and lower class members will seek loopholes in order to reduce personal taxes.
For low income citizens, or even lower middle class members, President Trump's plan will be a financial burden. However, because the new system benefits citizens working in corporations, Irwin believes people will "play the game" and maneuver away from high taxation. To simply explain the cost benefits and disadanvantages of the new plan, Irwin draws a parallel by stating, "My earning are labor income; I happen to be in the 28 percent tax bracket. Suppose I instead formed Irwin Scribblings, LLC, a "company"... could contract with The Times to provide articles about economics for a rate equivalent to the value of my current salary and benefits". By exemplifying the new system through a personal point of view, Irwin effectively captures the "loophole" in which millions of Americans will begin to seek in order to reduce annual tax payment. By creating an own "Irwin Scribblings LLC", Irwin believes US citizens will cut their rates over ten percent, a significant portion of people's income. However, the new policy is not the first time these tricks have been sought out by the public as Scott Greenberg, an analyst at the Tax Foundation states, "As long as you have differential rates, there will always be incentives to try to classify income in ways that take advantage of whichever rate is lower". Through a reference to a credible expert in the field, Irwin effectively capture his argument as he validates his point that people will continuously attempt to find "incentive" to reduce the taxes, such as joining a corporation in order to manipulate Trump's system. There will always be a large portion of the American population that seek new ways to "play around" the system and this always has and will be a continuous economic pattern.
In one of President Trump's first major economic reform policies, thousands of high corporate bosses will reap the benefits from the changes, all while millions of Americans will end up paying nearly double the percentage of the high end workers. In all, Neil Irwin believes there will evidently be a loophole around these new reforms, and will continue to cause more and more Americans to cheat the system.
Link: https://www.nytimes.com/2017/04/28/upshot/under-the-trump-tax-plan-we-might-all-want-to-become-corporations.html?_r=0