14 January 2018
The New GOP Tax Plan and Income Inequality
The new law has come under significant scrutiny by those advocating action on the question of income inequality since the very beginning. This is primarily due to the plan including certain provisions that stipulate tax cuts most substantially benefiting those more well-off in our society. Currently, under the previous tax law in effect for 2018, the threshold for the top tax rate bracket is set at those individually making $426,700 a year, and $480,000 for those filing joint as a married couple, and sets their tax rate at 39.6%. The newly passed tax plan not only increases the threshold for those who qualify to be placed in the top income bracket - making it necessary that one makes $500,000 individually, and $600,000 as a joint filing married couple - but also in the process lowers the percentage amount taxed to 37% on these individuals. While it is fair to say that the tax-plan does include provisions for tax cuts across the income spectrum, many critics have pointed out that this plan is supposedly aimed at helping the richer portion of income earners and corporations more than the average American. As in the opinions of many, those making the most money are often the most capable of paying comparatively larger sums of taxes without there being a very substantial effect on their lifestyle and financial situation, the tax cut on the richer portions of the country seems at the least misguided if any substantial progress is to be made concerning the rampant problem of income inequality.
Aside from criticism regarding the decrease of the tax rate on those more well-off in our country, the new plan has also received denunciation for its augmentation of the amount the super-rich can pass on to their heirs due to reforms in the estate tax. Under the previous law, Americans could pass on up to $5.5 million dollars worth of property and assets to their heirs tax-free. Now under the new plan, that amount was doubled to $11 million. As this only affects a very small and super-rich portion of the population, many view this increase in allowance of the amount of assets that can be passed on tax-free to be simply a give-away to those already extremely well-off financially. This is viewed by many to be another root of the persisting problem of why so much wealth is concentrated into so few people in this nation.
Finally the last major criticism that many have pointed out in this new plan has been the amount that it will raise the national deficit by. According to the Congressional Budget Office, a nonpartisan organization that provides budget and economic information to Congress, under the new tax plan the national deficit will raise by over $1.4 trillion dollars in the years to come. This brings into question just how this rise in national debt will affect certain entitlement programs, specifically those tasked with aiding those in poverty and facing personal financial uncertainty. Programs like Medicaid, a health insurance program for the poor, might face comprehensive reform in how and who it is distributed to. While some might view this in a positive light, as entitlements are viewed by many to be in need of reform, many critics have stated that this might lead to more people in dire need of this health insurance ultimately losing coverage. As those without access to adequate healthcare are often more likely to become sick, and thus unable work because of preventable conditions, this disregard for fiscal responsibility, coupled with the elimination of the individual mandate stipulated under the Affordable Care Act, could possibly lead to making the divide between the richer and poorer sections of the country even larger.
As we have analyzed from taking into consideration the ramifications that this new plan could have on the poorer sections of the country, it should be clear as to why many have voiced concerns on the possibility of this new law amplifying the rampant problem of income inequality in our country. While some might argue that overall this plan might possibly benefit the growth of corporations and businesses, I believe it is vital that more consideration be taken into just how we might see this new law play out with those less fortunate.
Works CitedLong, Heather. “Analysis | The Final GOP Tax Bill Is Complete. Here’s What Is in It.” The Washington Post, WP Company, 15 Dec. 2017, www.washingtonpost.com/news/wonk/wp/2017/12/15/the-final-gop-tax-bill-is-complete-heres-what-is-in-it/?utm_term=.dee8546ce8bc.
Mercado, Darla. “Find Your New Tax Brackets under the GOP Tax Plan.” CNBC, CNBC, 22 Dec. 2017, www.cnbc.com/2017/12/15/find-your-new-tax-brackets-under-the-final-gop-tax-plan.html.