President Donald Trump's newly unveiled tax plan will have a substantial impact on IL families and the state economy.
Mr. Bolten is president & CEO of the Business Roundtable, an association of leading USA companies. That's because it will raise prices on imported goods, he explained.
Business investment has been weak for the last couple of years, dragging down economic growth. "We're bringing them down, and I mean way down".
But the issue is complex. "Despite some efforts to eliminate it, the deduction for state and local taxes remains one of the largest deductions in the federal tax code".
"The economy was so bad several years ago, it hurt everyone". The stronger dollar hurt companies that sell their products overseas, and exports fell. The U.S. economy's "not growing, it's not growing at all". Borrowing makes those tough spending decisions a lot easier, but it also comes with a cost. More than half of respondents said the estate tax, which taxes inherited wealth, should be eliminated and that a repatriation holiday for foreign profits is a good idea.
"More recently, with the economy moving toward full employment, you would expect to see investment spending pick up and it's not obvious exactly why it hasn't picked up", Yellen said. President Donald Trump plans to change that by lowering the federal corporate tax rate to 15 percent. "American taxpayers spend billions of hours each year complying with our archaic tax laws, reducing economic productivity and job creation", he said.
Asked whether tax cuts since 1980 have ever paid for themselves in general, no economists argued that they had, although 17 percent said they were uncertain or had no opinion on it.
The plan would accomplish this through a 15 percent tax rate on corporations, by creating a territorial tax system and imposing a one-time tax on repatriated funds. IL should benefit more than most states from corporate reforms. Utilities had the lowest effective rate - 10 percent - from 2007- to 2011, according to the Treasury Department.
IL is a high tax, high-income state, and Illinoisans rank No. 10 among all states for gaining from the state and local tax loophole, according to IRS tax files.
As a result of avoidance, the USA doesn't collect much more of corporations' profits than other countries do, despite having a much higher official tax rate.
In any event, the Trump outline is the beginning of a conversation likely to result in substantial changes to our tax system.
It turns out that repealing Obamacare is, indeed, a major tax cut, although not mostly for the "rich". However, part of the corporate rate cut goes to companies that made investments in the past, which reduces federal revenue with no corresponding incentive to invest. They want to lower rates and reduce deductions on both the corporate and individual sides of the tax code, which will start a gusher of red ink and give the wealthy an outsized tax increase. The stated goal of corporate tax reform is to make the tax system competitive and less complex.
The alternative minimum tax (AMT), which is extremely complicated but which in essence operates as a tax of 26-28 percent on gross income (with only limited allowance of deductions), will be ended.
There's also a chance that some piece of the corporate tax might fall on those who can least afford to pay, specifically low-wage workers and poor people. In the end, as much as the American public may want a big tax cut, the fiscal realities of today demand revenue-neutral tax reform. This isn't a pretty sight to Congress seeing as the U.S.is now $19 trillion in debt.
The House Republican plan calls for an 8.75 percent rate on cash and 3.5 percent on other investments. Therefore, it is necessary to bring these rates into parity. This is something that President Trump partially added to his campaign plan last September by allowing companies to choose between full expensing and the deductibility of interest expense.
Many low- and middle-income taxpayers who do not itemize deductions would benefit.