NEWSSTAND

GOP Budget Passes House, Paves Way for Tax Overhaul

The GOP’s $4 trillion budget passed the House of Representatives this week. This marks an important step on the path to tax reform.

The budget passed the House narrowly, with a margin of 216-212. Twenty Republicans voted against the plan, along with Democrats. This suggests that tax reform faces significant obstacles if it is to pass by the end of the year.

Only 45% of Americans pay any federal income tax. If you’re one of them, the new GOP tax plan contains provisions that might surprise you.

Changing Tax Deductions

In years past, taxpayers have had the option of deducting either a standard deduction, or the amount of your state and local income taxes. The state and local income tax deduction, called SALT, remains popular: More than 44 million Americans choose to deduct their state and local taxes from their federal tax bill. They would no longer be allowed to do this, should the GOP tax plan become law. However, corporations would still get to deduct those taxes from their federal tax bill.

If and when the SALT disappears, the standard deduction would rise. Taxpayers would be allowed to deduct the first $24,000 of their income. Depending on how your income is structured, this could serve as a huge benefit. Some Americans, however, will feel the pain of losing the SALT deduction.

Public Opinion

One poll shows that over half of Americans oppose this plan in its current form. Only 34 percent of the country supports the proposal. However, American voters want tax reform. Simplifying the tax code, and easing the tax burden, were two components of Trump’s campaign. The Republican members of Congress who voted against the budget did so not because they oppose reform, but because they think the reform does not go far enough to give taxpayers a break.

The Trump Administration has repeatedly stated that this plan would allow the average American household to keep $4,000 more each year. While all of us have unique tax situations, keeping more of your income sounds like a good idea to all. Sen. Orrin Hatch (R-UT) and Rep. Kevin Brady (R-TX) crafted this tax plan.

How Much are YOU Taxed to Fund the NFL?

Politics and sports don’t mix well, and the firestorm of debate about NFL players taking a knee during the national anthem is just one example. Another is the confusion over the NFL’s tax status, which has been renewed after President Trump tweeted earlier this month about the league’s “massive tax breaks.”

Federal Tax Status

The NFL League Office now pays federal taxes, though that was not always the case. It’s the 32 NFL teams that get massive tax breaks, usually granted by states and cities.

Until 2015, the NFL League Office paid no federal taxes. Because it functions like a trade organization, the federal government allowed it to remain tax-exempt. he NFL League Office functions as a trade association that represents the league’s 32 teams. It promulgates and enforces the league’s rules, promotes the NFL to the public, and does other administrative tasks like hiring referees, running the college draft, and conducting player safety research.

In 2015, the League Office gave up its tax-exempt status and start paying taxes. The move was voluntary –  primarily because the league wanted to rid itself of the criticism its tax-exempt status was generating. Apparently, the roughly $10 million dollars per year the League Office saved on taxes wasn’t worth the public relations headache.

Teams Get State Subsidies

The teams are all individually owned, and all are classified as for-profit organizations that are subject to taxation on every dollar of income they generate. However, states and cities grant teams massive tax breaks, while subsidizing stadiums with your tax dollars.

For instance, Louisiana grants the New Orleans Saints about $165 million in tax breaks. Citizens in one Nevada county paid an extra $750 million in taxes to subsidize the Las Vegas Rams. In total, NFL stadiums have benefitted from $1.1 billion in taxpayer subsidies.

Even though the NFL pays federal taxes, it still receives a sweet chunk of change from taxpayers.

The NFL generates upwards of $10 billion in revenue per year, with profits exceeding $1 billion annually. And yet, you and I are still paying taxes that fund the creation of stadiums and cushy deals for teams.

GOP Establishment Disguises Tax Hike

Nearly every Republican in Congress ran on a platform of cutting taxes. However, some of them now want American businesses to pay even more to Uncle Sam. The proposed GOP tax plan claims to lower the corporate tax rate to 25%. It also ensures that the lower rate will not apply to 80% of the American economy.

The Republicans behind this tax plan, many of whom will not share their names with the press, have decided to pick and choose which businesses to benefit. Manufacturing companies will pay the lower rate, while service companies are exempt from the tax cut. Most American small businesses are in the service industry, while only large corporations typically have the money to build manufacturing plants.

Even approved manufacturing companies might still pay higher taxes, depending on state and local taxes.

Personal Ramifications

The tax plan purposefully tilts the playing field for businesses, and it leaves personal taxes murky as well. The plan leaves open the possibility for a fourth tax bracket. People in that bracket could be exempt from planned tax cuts.

If you itemize your tax deductions, you will pay more to the IRS under this plan. The GOP tax plan would eliminate the state and local tax deductions. You and your employer might both be paying higher taxes should the current tax plan become law.

Equifax Gets Hacked, IRS Awards them a Contract

Well, this seems almost too dumb to be real. Equifax, the company that announced massive data breaches last month, has received a contract to work for the government.

The IRS awarded Equifax a contract to work on verifying consumer identities. The company has proven itself unable to keep personal data safe. Last month, Equifax announced that hackers had accessed the social security numbers of 145.5 million Americans.

No Alternatives Considered

Despite the company’s recent security failures, the IRS awarded it the contract without considering any other bids. The IRS claims that no other company can perform this sort of work. However, Equifax has competitors that may have better data security practices.

Tax Money to Equifax

The government has decided to send millions of our tax dollars to a company with dire security flaws. Not only that, but several Equifax executives may have profited from the scandal. Three of the company’s leaders sold $1.8 million in stock before the data breach became public. The three are under investigation for potential insider trading.

IRS Re-Hires 213 Criminal Employees

A new report shows that the IRS re-hired 213 fired employees.  While initially employed by the agency, these employees committed offenses like tax evasion, falsifying documents, and misuse of taxpayer data.

Refilling the Swamp?

These “public servants” have access to Americans’ most sensitive financial information. Someone who abuses that power could collect data on innocent citizens and potentially use that information to commit a crime.

The 213 fired employees represent only a fraction of the problem at the IRS. Out of all the IRS employees caught breaking the law, Forbes reports that only 39% get fired. Though the agency demands honesty and accuracy from citizens, it seems to have much lower standards for its own internal dealings.

Commissioner Koskinen Under Fire

The re-hiring began in late 2015, under the leadership of Commissioner John Koskinen. Koskinen, an Obama appointee, faced impeachment hearings last Fall regarding the alleged targeting of conservative groups.

A year later, the IRS faces public scrutiny yet again.

Trump Announces Plan to Renegotiate NAFTA

President Trump formally announced to Congress that he will renegotiated NAFTA as early as August 2017. There is a 90-day consultation period for the Trump administration, Congress and private businesses to determine what must absolutely be renegotiated.  After this, President Trump will renegotiate with Mexican and Canadian officials, at which time he will promote regulations more fair to American businesses.  Trump may require Mexico and Canada to raise their de minimis thresholds (DMTs), which, as they stand, stifle American small business exports.

American DMTs

Each country determines its own DMT When an export to that country is worth more than the DMT, the exporter must pay an additional tax on the shipment. For example, the current US DMT is 800 USD. This means that a Mexican company may pay no tax if it sends a shipment worth 799 USD across our southern border.

Do Americans enjoy the same privileges? N0. American exporters must pay taxes on everything above 20 CAD (in Canada) and 20 USD (in Mexico). Why should our businesses have to pay more taxes? President Trump has an opportunity to level the playing field.

Demanding Reciprocity

Currently, both Mexico and Canada agree to work on mutually beneficial trade deals. The DMT issue will test the seriousness of their commitment to making NAFTA work.

The Obama Administration actually worsened the problem by raising our DMT from 200 USD to 800 USD in 2015.

It is undeniable that President Trump must negotiate deals that protect small businesses in America. Raising the Canadian and Mexican DMT levels would help accomplish this. President Trump could use this opportunity to level the playing field and stop stifling American small business exporters.

Financial Markets Rally, Relax on Trump Tax Plan Announcement

President Trump released his long-anticipated tax reform plan on April 26th, setting up another major legislative push for his administration. The White House hopes to get tax reform through Congress to secure a victory for the administration and to make good on a promise to the American people.

Trump’s announcement did not unveil the actual legislation, but it provided key points about what to expect in a bill.

Tax Reform Details

One of the main goals of Trump’s tax reform is to reduce the amount of individual income tax brackets. Currently, there are seven income tax brackets for Americans. Trump would like to bring that number down to three brackets, with rates at 10%, 25%, and 35%. A top rate of 35% would be a 4.6% decrease from the current top rate of 39.6%.

Along with simplifying the tax bracket, Trump’s proposal calls for a drastic reduction in the corporate income tax rate. The United States currently holds one of the highest corporate tax rates in the world at 35%. Trump’s plan would drop that rate down to 15%, in what the administration is calling “the largest tax cut in U.S. history.”

Experts and the Market React

The Dow Jones industrial average climbed to within 1% of its all-time high on the day of President Trump’s announcement. The S&P 500 Index also came close to exceeding its all-time high. Both indices ended up decreasing as the day wore on. John Conlon, chief investment officer at People’s United Wealth Management, attributes this to the earliness in the reform process. “The discussion around the tax plan is a positive for the market,” Conlon said. “I think it takes some pressure off the market, but there are still questions about some of the details.”

President Trump has had a positive effect on the stock market since his election in November. The S&P 500 has posted a weekly gain of approximately 2%, totaling 11.6% since the election. Expectations of lower taxes on both people and corporations might have precipitated some of this growth. Should President Trump follow through successfully on tax reform, the markets would react strongly.

Trump Reveals Plan to Cut Obama-Era Taxes

President Trump plans to make major changes to the U.S. tax code. These changes might save you thousands of dollars each year – but they’re controversial in Congress, and face a tough battle ahead.

Giving Back

President Trump is in the process of rolling out his tax-reform plan.

The liberal media is trying to paint a dark picture of the future for Americans. The New York Times ran the headline “White House Proposes Slashing Tax Rates, Significantly Aiding Wealthy,” shortly after Trump’s proposal.

The truth is, his tax plan isn’t just for huge corporations and societal elites. This new tax plan actually doubles the standard deduction for both individuals and families. This means that taxpayers – no matter their income level – would keep thousands more dollars each year.

Trump is also proposing to slash the corporate tax rate from 35% to 15%. Skeptics argue that doing so will increase the federal budget deficit. Proponents say that Congress must live within Americans’ means – not the other way around. New tax rates might require a market adjustment in the short term, but economic growth would prevail over time.  

Treasury Secretary Steve Mnuchin has faith in the President. He says the plan will pay for itself by closing loopholes and raising deductions. Wealth will not be hoarded by “monster corporations,” despite popular belief. Small and family-owned businesses will benefit just as much from this reform.

Death of the “Death Tax”

The estate or inheritance tax – informally known as the “death tax” – will also go away under Trump’s plan. The government collects taxpayer money on the transfer of an estate after someone dies. Americans have debated the feasibility of the death tax since the 1940’s. It has its roots all the back in World War I, when the government levied the property of deceased Americans to fund the war effort.

Gary Cohn, Chief Economic Advisor in the White House, makes his plans clear: “Right now, our initial proposal is to immediately — when this proposal becomes effective — to phase out the death tax,” he told Newsmax

Additionally, Trump and Cohn aim to repeal the capital gains tax that President Obama instated to fund his Affordable Care Act.

Big Changes Ahead

As the White House reveals more details of the tax plan, members of Congress will pick sides before a vote. Americans, especially conservatives, are cautiously optimistic about the plans to cut taxes. Soon, we’ll see if Congress shares their views.

Trump Budget Boosts Military, Slashes EPA

“History shows that when America is not prepared is when the danger is greatest. We want to deter, avoid and prevent conflict through our unquestioned military dominance.”

 

Donald Trump stated this during the 2016 presidential campaign, when he was promising to grow the U.S. military. Now that we have seen President Trump’s proposed budget for the 2018 fiscal year, we know he was serious about that commitment.

 

With a proposed $54 billion increase in defense spending, Trump’s budget puts an emphasis on military strength and homeland security. If enacted, the United States would be spending $596 billion on our military – more than any other country on Earth, and more than the next seven countries combined.

 

Trump’s budget proposal also calls for down payments on two of his other major campaign promises: the border wall and school voucher programs. All of Trump’s proposed spending comes with a trade-off – massive cuts in existing federal programs.

 

That’s why the Trump budget has supporters of big government feeling distraught; some of their favorite federal agencies are hardest hit.

 

The Environmental Protection Agency (EPA) will take the hardest hit, as they will suffer a 31% decrease in funding. Coming in a close second is the State Department, which will endure a 29% funding cut compared to their 2017 budget. These are two examples of the 19 agencies that will face funding cuts if Trump’s budget is passed by Congress.

 

Gary Cohn, the National Economic Council Director, summarizes the agency cuts in a relatable fashion. “It’s no different than every other family in America that has to make the tough decisions when they need to spend money somewhere, they have to cut it from somewhere else.”

 

President Trump’s proposed budget is not expected to increase next year’s projected deficit of $487 billion. While the budget is not expected to lower the federal government’s debt either, it does show Trump’s commitment to stop the national debt from spiraling out of control.

 

Whereas past presidents have increased the federal deficit during their time in office, Trump’s first budget proposal shows he is on the path towards a smaller, more efficient federal government. As Democrats wonder how Big Government will afford these budget cuts, the rest of the country knows that we are nearly $20 trillion in debt. We can’t afford not to cut spending.

Only 5 States Allow Education Savings Accounts

One of the easiest methods of allowing School Choice is only used by five states. Anyone in the other 45 states has no choice about where their education tax dollars are sent.

If you live in Florida, Arizona, Tennessee, Mississippi, or Nevada, you’re in luck. If not, the tax money that the government will use to educate your child is only accessible if your child goes to the local public school.

Sounds crazy, right?

An education savings account (called an ESA) is an account that contains the amount of money the government spends to educate a child. If the Jones family has 4 children, they would have access to 4 ESAs.

Wherever the child goes to school, the ESA money will go with them. If the Jones family thinks that a private school would be best for one of their children, that child (and their assigned ESA money) can go to private school. The parents get help with paying tuition, using money that was already set aside by the government to educate that child. 

The remaining 3 of the Jones kids go to public school, that money goes with them. The same holds true for parochial schools and home schooling programs. Let’s say that one of the Jones children needs some extra help with algebra. ESA funding can be used to pay for tutoring, too.

In a state without ESAs, the Jones family would only be able to access the ESA money if their kids went to public school. If they were able to shell out the money for private school, poof! The ESA money evaporates – even though it was originally intended to benefit their children’s education.

ESAs are especially important for children with special needs. If a special needs child does not live in a state with an ESA program, that child’s family can either shell out tens of thousands of dollars each year for specialized schooling (something many cannot afford), or send their child to the local public school (which may not have resources for their child’s needs).

One mother of a special needs child said, “These scholarships empower moms and dads of students with disabilities with the flexibility to create education plans custom-made for their children.”

An ESA allows that family some flexibility to pursue the best kind of education for their children – no matter what kind of education that might be.

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