The GOP’s New Tax Plan Will Effect the Economy in a Big Way

The year 2018 will bring in many changes for the United States, but perhaps the biggest one may be the ever-changing, GOP tax plan that may hit the President’s desk next year. For the past year, the Republican-led Congress has fought for legislature to be pushed through, with varying degrees of success. Throughout the first half of the year, their push to repeal and replace the Affordable Care Act or Obamacare was met with defeat as there was no consensus on a new plan to replace Obamacare. Even a so-called “skinny repeal” of Obamacare was met with failure.

Since the failure of the GOP’s largest promise from the 2016 election, the focus has shifted to an old favorite of the party, tax cuts. The second half of 2017 has been largely filled with talk of a new tax plan to continue the economic rush that has taken over the stock markets of late.

This newly proposed tax plan falls in line with most of what one would expect from a Republican-led Congress, cuts and reductions.

Kent State MPA Coordinator and Political Science Professor Mark K. Cassell says that “the premise behind the plan is two-fold: first, trickle-down economic theories such that the tax windfall will lead to an increase in investment and consumer spending,” and “fulfilling their promise to those who voted and funded the campaigns”

The GOP plan has been discussed and debated for weeks on end as Democrats such as Senator Bernie Sanders have claimed that the cuts and reductions are, “laying the groundwork for cuts to Social Security”. Sanders has also panned the plan as “absurd” and “horrifically unfair”

There are two separate bills that have been passed in the House and the Senate, but both are roughly the same.

According to CBS News, the two bills, “reduce individual rates across the board while roughly doubling the child tax credit and the standard deduction. In exchange, both plans eliminate deductions for interest on student loans for state and local income taxes, and both plans cap the property tax deduction at $10,000”

The GOP has a history of tax cuts when it has controlled the government, as both Ronald Reagan and George W Bush both had rather large tax cuts as big agendas in each of their individual campaigns. Trump and his GOP colleagues are no different as during his 2016 campaign for the presidency, Donald Trump promised an elimination of the income tax for those that are single and earned under $25,000 amongst other things, like a plan that “doesn’t add to our debt and deficit”.

However, one major criticism of the GOP’s plan has been that it will continue to add to the nation’s debt, a direct contradiction of what the GOP has stated was its intention. By now most Americans have heard about the country’s massive debt as it has been a major point of discussion by politicians and elected officials for years now.

The Tax Plan would as it sits now add around $1.5 Trillion according to the Joint Committee on Taxation. The Republicans who are in favor of the bill, countered that report by saying that the addition to the debt would be much lower, thanks to unleashed economic growth.

However, Associate Professor and MPA Coordinator from Kent State University Daniel P. Hawes says that he does not believe there would be any noticeable change to the state of affairs in the country, “I think there will be some growth, but it will be small. The corporate tax rate cut might spur some investment but not as much as the GOP has argued. Many large corporations are already sitting on very large cash assets, so if they wanted to invest this cash, they already would be doing so.”

The base of the GOP plan is to cut taxes on the rich and hope for those cuts to trickle down to those less fortunate, otherwise known as trickle-down economics, the standard Republican plan when it comes to the economy. Hawes described the plan much like Cassell.

Hawes said the plan, “the tax reform seems to really be more of a tax cut than a comprehensive tax plan. It does eliminate a number of deductions but it does not simplify the tax system nearly as much as was advertised. The stated premise of the plan is to one simply the tax system and to two promote economic growth. I think it will do little in either regard”

When it comes down to it, there is no consensus on the plan from both Democrats and Republicans on the plan, the vote on the plan was essentially down party lines 51-49, with Senator Bob Corker being the only Republican to vote against the bill.

Daniel Hawes is one that thinks the tax cuts won’t do much in terms of stimulating economic growth. “I don’t think we’ll see as much of a stimulative economic effect via consumer demand than we would if there were more tax cuts or refundable credits distributed to the lower end of the income distribution.”

One Student who I spoke to who is a registered Republican seems to think otherwise. Evan Gilmore, an Aeronautics major at Kent State, says he believes the GOP’s tax plan will, “make things better in a big way” and that the cuts and reductions will be, “reminiscent of Reaganomics.”

The Plan will most definitely be affecting every aspect of American life whether the Republicans or Democrats are correct about the outcome of the plan. Either there will be a boom and sustained period of good for the United States and its people, or we could be in for a long couple of years.