There are some very good ideas embedded in the tax cut 2.0 proposal. They would benefit Middle America. They would benefit the economy. But sadly, they will fall victim to politics. 2.0 is highly unlikely to not make it through the Senate.
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What a shame … we could have made individual tax cuts permanent … that’s a big deal when you’re doing your financial planning.
We could have expanded retirement savings … wouldn’t that have been nice? We could have allowed early withdrawals from 401(k)’s and IRA’s, without penalty, if you have a child or an adopted child. We could have expanded savings plans to include money for home school expenses, student debt or apprenticeships. Who doesn’t want that?
And we could have allowed new businesses to write off startup expenses. That would have been good for small business formation!
Ah, but, these proposals need 60 votes in the Senate. That means they need support from all Republican senators, and some Democrat crossovers. Not going to happen. Republican Senators Jeff Flake and Bob Corker oppose it: They worry about the deficit. Senate Democrats have been told to “resist” anything Trump suggests. The votes aren’t there. 2.0 is doomed.
Meanwhile, we’re finding out how the Democrats would help the middle class: Tax the rich. They want the top tax rate to go up to 45%. Senator Elizabeth Warren wants it above 50%. This would not lower the deficit. It would not grow the economy. It would not help the middle class.
So there you have it: A proposal from Republicans that would help millions, probably going nowhere.
And a proposal, that helps no one, adopted as policy by Democrats.
What a shame…