Part 2: What does it mean to you? The GOP's tax proposal
Bottom Line: In the first part of today's breakdown of the GOP proposed tax reform package I demonstrated that everyone benefits meaningfully prior to arriving in the top tax rate bracket. The second, important piece of the pie is the corporate tax reform proposal. The news here is notable too. There are two key tax rates for businesses they're these:
Flat corporate tax rate of 20%
Pass through rate of 25% for sole proprietors, S corporations & partnerships
Deductions limited to R&D and affordable housing only
Just as I debunked the leftist lies of the impact of the reform on individuals (everyone benefits meaningfully prior to the top tax rate), I'm getting ready to do the same here. The argument by many leftists is that cutting the top corporate tax rate will shift the tax burden further to individuals. That's factually inaccurate once again. While the top corporate tax rate is currently 38%, the net effective tax rate average according to the Treasury Department is 19.4%. As has well been documented there are many companies that avoid paying any corporate tax due to current loopholes, ie GE and those who pay the top rate that aren't favored by the code ie, CVS.
This new rate will actually be a slight overall increase for the average business unless they're specifically investing in growth through R&D expenses or paying for affordable housing to help potential employees. What it does is end the "winners and losers" that have been carved out in the code. About half of companies will benefit. About half will pay more - some substantially more and the overall burden will be about the same.