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U.S. Tax Bill Could Boost Investment, But May Not Help Middle Class: News Analysis

Updated:2017-12-7 10:00:26    Source:www.tannet-group.comViews:40

It is reported that U.S. President Donald Trump's tax overhaul is close to becoming law, but critics say that while it may increase investment, the legislation may not help the middle class.

The weekend saw the Senate pass the most sweeping tax overhaul since Ronald Reagan's presidency in the 1980s, and one that experts say will impact nearly every part of the world's largest economy, affecting both large and small businesses as well as households.

The House of Representatives voted on Monday night to go to a conference committee to reconcile the key differences between the tax bill passed a day earlier in the Senate and the house version hammered out last month.

Congressional Republicans expressed the hope that the final version will be available on Trump's desk before Christmas, ready for the president to sign it into law.

NOT REALLY BENEFITING MIDDLE CLASS
Critics are blasting the tax bill as one in which the biggest benefits will go to the wealthiest individuals and corporations, with average income earners seeing their taxes lowered at first but increasing over the next few years.

"The tax bill is tilted heavily toward wealthy individuals and corporations, so it is not likely to help the middle class that much," Darrell West, a senior fellow at the Washington-based think tank Brookings Institution, told Xinhua. "People of average means will get a small tax cut in the next few years, but then their taxes will go up."

The scholar believed there could have been an opportunity earlier in the first year of Trump's presidency to create a bipartisan reform that would look at the long-term health of the U.S. economy and fiscal responsibility.

Yet that opportunity was lost and partisanship resulted in a hastily written tax plan merely pursuing a major Republican Party accomplishment before 2018.

Indeed, despite the fact that the stock market and large companies have been doing well, there remain long-term economic problems. While jobs are plentiful and wages are high in major cities like New York and Washington, D.C., unemployment rates are high across many of the rural areas.

ADDITIONAL BURDEN TO DEFICIT
Other experts, are positive on growth, investment and wages, but have expressed concerns that the bill will add additional burden to the nation's deficit.

The tax bill comes at a time when the United States has one of the world's highest corporate tax rates. Statistics from the Organisation for Economic Co-operation and Development (OECD), a group of advanced economies, show that the top corporate tax rate in the United States, a combination of federal, state and local taxes, is at 39 percent this year -- well above other OECD members.

Trump, the billionaire-turned-president, would like to lower the rate to 15 percent, according to an August 7 report by the National Public Radio.

In addition to further harnessing economic growth, the president has on various occasions boasted his plan to give incentives for U.S. corporations to return home, executing the "Buy American, Hire American" agenda that, among other policy initiatives, illustrates his protectionist stance.

As the latest tax reform, just like Trump's other policies such as renegotiating a series of regional and global trade pacts, is expected to deal another blow to globalization and possibly continue upsetting even Washington's traditional allies, experts have said the prospect of a domestic job increase also remains unclear. (Source: Xinhua News)

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