RepublicanPlatform and Tax Reforms
Therelease of the Republican Platform elicited debate on whether thepolicies proposed are realistic given the fact that, according tospecialists, some policies may have negative implication to thecountry. The Platform provides different policies and strategies thatRepublican administration will focus on while in office. The platformaddresses various issues that President-elect will give priority suchas economic growth, creating jobs, the resources in the country andthe issues of taxation. The Republican Platform gave specialattention to the taxation system the GOP considers the current taxsystem as one of the causes of sluggish economic growth. According tothe Republican Platform, the president elect’s proposes to imposeterritorial tax system. Implementation of the territorial tax systemhas been criticized as likely to have adverse consequences for theeconomy because the system only taxes corporations operating withinthe country. According to Citizens for Tax Justice Staff (2016), theterritorial tax system will make American firms to move theiroperations and jobs offshore.
Thispaper examines the Republican Platform and its impact on the country.The paper will focus more on the tax proposal as highlighted in theRepublican Platform.
Republicanplatform and the objective of the organization
TheGrand Old Party (GOP) passed the Republican platform 2016 during theparty`s National Convention. The document highlights the statementsand policies that the Republican Party has decided to support once inoffice. Apart from supporting the policies of the Republican Party,the platform also aims at addressing various policies that the Obamaadministration has failed to implements or whose their implementationdid not benefit the country and her people. The objective is topromote the economic growth of the country by ensuring effectivetrade deals with other countries trade deals that are beneficial tothe United States. The platform also focuses on ensuring that the taxrevenue requested by the government fair and simple so that it doesnot dent the economy. In the tax, the GOP is focused on ensuring thatmethods used in passing tax code have considered various importantfactors such as how much and from whom the tax changes or increasewill be implemented.
TheRepublic Platform of 2016 is structured into four sections restoringthe American Dream, A Rebirth of Constitutional Government, America`sNatural Resources: Agriculture, Energy and the Environment,Government Reform, and America Resurgent. In the first section,restoring the American Dream, the focus on explaining how the partywill help improve the economy to make America a land of where everyCitizen has the opportunity to realize their dream of prosperity.This will be achieved through various strategies like checking jobcreating, ensuring that tax codes promote investment, making winningtrade deals and ensuring that the country becomes more competitive.The other section, A rebirth of Constitution Government, the plan ofthe party is to ensure the Constitution is followed to the letter.This will give power to the federal government whereby the federalgovernment will approve most of the process. In ensuring that theconstitution is upheld, the Republican country administration willreform the judiciary, administrative and other arms of government sothat to promote law and order in the country.
Thenext section that is addressed in the Republican Platform is theplans by the president-elect to safeguard the natural resources suchas agriculture, energy, and the environment. This is one of thestrategies that the president to promote job creation in the countryand boost the economy.
Year-endtax planning (explain) theoretical
Theadministration of President-elect is expected to bring new changesespecially on how Year-end tax planning will be conduct. Since thetax Proposal by the president-elect and the Republican Platform arealmost similar, the country is likely to have a shift in the taxsystem in the country. According to Cole (2016), contributions to thetraditional IRAs will be deductible however, it will depend on theability of the taxpayer. Some of the factors that will be checkedinclude if the spouse is able to contribute to the 401(k) or planprovided by the employer. The deductions will also be dependent onthe amount of income earned by the taxpayer and the marital status.During the campaign, the president elected decided he was going toreduce the tax rates on individual income tax.
Theend year planning will be changed by the fact that the governmentwill also appeal other factors attached to the income tax such asAffordable Care Act. This means since the taxes will be changes thepublic will have to rely on financial advisors who will guide them onhow to go about it. The year-end tax planning will take intoconsideration the 35% cut that the president-elect is proposing onmiddle-class families with two children. In the tax planning, thefamilies will also be allowed to deduct Medicare tax from theirtaxes. The current individual tax rates are 10, 15, 25, 28, 33, 39.6percent but the president-elect has proposed to only retain threerates,12, 25 and 33 percent.
Thepresident-elect has planned to do away with the often called Obamatax which is taxing of passive income. This means the investor willhave to check if there is any passive activity that is likely to makeincome should differ their transactions to 2017 in order to preventthe being tasked under the current administration.
Americanswith capital gains should focus on selling them before 2017 becausethey will be likely to save 5% of their taxes. The difference betweenthe current tax on capital gains and the one proposed by thePresident elect is the bracket. In the current administration, thebracket is $425400 if single and $487650 is married. However, underthe president elect proposal, the plan start as low as $127500 ifsingle and $255000 if married and filing jointly. Since the presidentelect has proposed to retain the current rates of 0%, 15%, and 20%,then Americans who will sell their asset before the new proposals ofthe president takes off will save 5% of the Federal taxes (Rugabe,2016).
of the GOP platform tax proposal
Thetax proposal that is promoted by the President elect promotesterritorial tax system, which only focuses on taxing productionactivities that are conducted within the country. Implementingterritorial tax system means that American companies that conducttheir operations outside the country will no longer be taxed.According to Citizens for Tax Justice Staff (2016), this is a movethat they will lead to lose of jobs since American corporations willseek to invest outside the United States to avoid being taxed by thegovernment. The president elect is also planning to substantiallylower the corporate tax rates as an incentive to increase investmentin the country. This move will be an incentive to investors seekingto invest in the country. However, the government will require to bekeen on sealing all loopholes and technicalities companies use toevade tax in order to ensure that the revenue is not affected. Inaddition, the government will have to implement other strategies thatwill help to prevent the American corporation from moving jobsoutside the United States.
Thetax proposal of the Republican platform is based on the idea the taxshould promote the economic growth of the country and not the otherway. The reforms of the tax codes in the country are based on theidea that the current tax code has been the main cause of dwindlinginvestment in the country. The Republic proposal to impose strict andbalanced budget will help to prevent the government from overspendingwhich has been one of the causes of the constant increase in thebudget deficit. The balanced budget will be supplemented with arequirement for the supermajority for any increase in taxes. The planby the GOP is similar to the proposal by the president elect becausethey both aim at reducing the complexity in the tax system and thetax burden on for the low income earners.
TheRepublican Platform plans repeal Foreign Account Tax Compliance Act(FATCA) in order to ensure that all American Citizens comply with thetax codes. This Acts` provisions include accessing bank accountinformation of from foreign banks and exchange the information withthe IRS. This is a good strategy for increase the tax revenue of theUnited States given the fact that there is a considerable number ofAmericans who hide money in foreign banks to avoid their taxresponsibility. In addition, the president elect plans to stop theincrease in the tax that is made on from the gas. The increase in gastax, although has provided the funds for the repairs and constructionof infrastructures, it has however contributed the increase in thecost of gas in the country. This decision will trigger the growth ofinvestments that mostly rely on gas.
of president elect™s tax proposal
Thepresident tax proposal is almost similar to the tax proposals thatare promoted by the Republican Platform. The president tax proposalis based on the reducing the tax burden to the low-income earnerwhich including increasing deduction on tax. The president-elect taxplan will affect individual tax rates and capital gain tax wherebythe president will lower the top tax rate and reduce the number oftax brackets. Under the new rates, the government will offer fewrates 12, 5 and 33, as compared to the current rates (Ydstie, 2016).
DonaldTrump, in his tax proposal, he is concerned of the high number ofcompanies leaving the country and setting up subsidiaries in theother countries such as the United States. This is main reason why heproposed to impose tax on the products that that are shipped back inthe United States by American companies that relocated to othernations. On the other hand, he proposes to cut the taxes onorganization that will be operating in the country.
Theother area that the president elect is aim to change is on standarddeduction and personal exemptions that are made on the Americans. Inthe new changes, the Citizens will be subjected to new above-the-linedeductions which will not cater for child care but also foreldercare. Donald Trump has been firm on critiquing the AffordableCare Act and thus he proposed to repeal and impose new deductionswhich include 0.9% Medicare surtax on the income gained from wagesand self-employment and 3.8% Medicare surtax on net investmentsincome (Rugaber, 2016).
Underthe new president, the current Federal estate tax will be abolishedand replaced with capital gains which take effect at the death of theowner and will be subject to $ 10 million exemption. President electwill reduce the corporate taxes by 20% from the current 35%. This isin line with the president`s plan to promote investment in thecountry to promote economy and job creation (Tax Policy Center,2016). The president elect`s tax proposals are based on four mainareas, increasing tax relief for middle-class Citizens, simplify thetax code, growing the economy and reduce budget deficits.
HypotheticalTaxpayer
Withthe expected changes in the tax system, financial advisors have begunto advise citizens on how to prepare for the anticipated changes. Thepolicy shift comes with various changes that can be a complex issueto the public. These changes include understanding on how to file fortax compliance and tax returns. Since the Republicans proposal isout, it is easy to learn more about the expected changes and takeearlier preparations.
Asproposed by the president elect, the estate tax will be subject up to$10 million which is explained by different commentators as theamount of capital gain one should have to be taxed (Cole, 2016).Unlike the estate tax, the capital gain tax will be completed uponthe death of the owner of the property.
Year-endtax plan for client
Theyear-end tax plan will be affected by the new government because theRepublican Platform aims and reducing the tax returns and ensuringright implementation of tax liability. The president elect plans tomake the deduction from married joint-filling couples to $200, 000and the $100,000 for unmarried individuals (Cole, 2016). With regardto deduction, the president elect aims to increase the deduction forboth unmarried and married people in the country. The plan of theRepublican is to ensure that the citizens do have a big burden of taxwhich hinders them from investing.
Conclusion
Thegovernment strategy is to promote economic growth and boost thegrowth of the economy by strengthening platforms that contribute toeconomic growth such as taxation growth and other federal policies.The Republican Platform provides various policies that the Presidentplans to implement once the new government is inaugurated. TheRepublican government plans to impose policies that will boost theeconomy in addition to repealing some of the current policies. Thegovernment tends to incorporate all the sectors of the economy suchas agriculture, natural resources and making the country conducivefor more investment. Key among the policies is the change of the taxpolicy that government is planning to implement. According to the taxproposal of the Republican, the government will be more focused ontax codes that promote economic growth by providing incentives forinvestments. The tax reforms will not only focus on reducing taxrates in the country but also ensure that all the people in andoutside of the country comply with the tax requirements. Thegovernment plans to achieve this by repealing the Foreign Account TaxCompliance Act (FATCA), which will enable the government to accessfinancial details of Americans residing outside the country.Generally, the approach taken by the Republican can have a positiveimpact on the economy based on how it is implemented. Although thetax approach plan aimed by president elect has been criticized asunrealistic, it will depend on how the government will implement thewhole strategy.
References
Citizensfor Tax Justice Staff. (2016). The Five Worst Tax Policy Proposals inthe 2016 Republican Party Platform. Retrieved December 8, 2016, from
http://www.taxjusticeblog.org/archive/2016/07/the_five_worst_tax_policy_prop.php#.WEke9Dj2TCM
Cole.A. (2016).Details and Analysis of the Donald Trump Tax Reform Plan,September 2016. Tax Foundation.Org. Retrieved December 8, 2016, fromhttp://taxfoundation.org/article/details-and-analysis-donald-trump-tax-reform-plan-september-2016
Rugaber.S. C. (2016). How do the presidential candidates’ tax proposalscompare?. PBS. Org. Retrieved December 8, 2016, fromhttp://www.pbs.org/newshour/rundown/presidential-candidates-tax-proposals-compare/
TaxPolicy Center. (2016). An Analysis of Donald Trump’s Revised TaxPlan. Tax Policy Center. Retrieved December 8, 2016 fromhttp://election2016.taxpolicycenter.org/
Ydstie.J. (2016). President-Elect Trump Plans To Slash Taxes On Businesses —Including His Own. NPR organization. Retrieved December 8, 2016, fromhttp://www.npr.org/2016/11/21/502918106/president-elect-trump-proposes-to-slash-taxes-on-businesses
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