Tax Plan Explained by Jonathan Williams (WTOP Radio)
Shawn Anderson (co-anchor): 5:11 on WTOP. President Trump has planted a kiss on a symbol of the House Republican tax plan. In a White House meeting, the President was shown two postcard-sized papers that some taxpayers would be able to use to file their taxes. The President kissed one of the postcards before giving it back to Ways and Means Chairman Kevin Brady. Well, the sweeping rewrite of the tax code involves a $1.5 plan that will give a large tax cut to corporations and smaller savings for middle class families.
Hillary Howard (co-anchor): Joining us live to talk about it, Jonathan Williams, chief economist for the American Legislative Exchange Council. Thanks so much for being here.
Jonathan Williams: Well, good afternoon. Thanks for having me.
Hillary Howard (co-anchor): There’s been so much back and forth on how much this would help or hurt the middle class. How do you see the tax plan with regard to middle income earners?
Jonathan Williams: Well, I spent a lot of the day down on Capitol Hill today talking with congressional leaders and looking through the details of this tax reform plan, which is an historic plan which hasn’t been done as you know in more than 30 years since Ronald Reagan. There’s a lot of things for all taxpayers to like from this tax reform, including low and middle income taxpayers — including things like doubling the standard deduction increase in the child care tax credit, allowing families to save tax-free for their kids’ education — both their higher education and K-12. So many good things, as well as, what this will do to the economy — and just grow the economy — something that we desperately need coming out of this 2008 recession. This is the worst economic recovery coming out of a recession since World War II, so we desperately need this economic boost.
Shawn Anderson (co-anchor): Let’s talk about the tax benefits that have been a major incentive for buying a home over the past few decades. This plan would cap the deduction on property taxes also cap the mortgage interest deduction. Could this blow a hole in the housing market?
Jonathan Williams: No, I don’t think so because if you look what the overall what this tax plan is going to do to the economy to get 3% or 4% GDP growth moving again in the United States, I think this rising tide of tax reform lifts all ships and that’s something important that we keep our minds on the long-term picture. While people may be giving up some deductions here or there as part of tax reform — broadening the tax base as we say — that allows for reducing tax rates on individuals and businesses across the board, taking what our businesses were paying — highest in the industrialized world, down to lower than the average. That’s a huge win for employers, job creators and employees across the United States. So, while people may see some things on one side of the ledger go away, I think you’re going to be more than happy with the kind of tax savings that are seen elsewhere in the package.
HIllard Howard (co-anchor) Some people are a little critical that there are all of these tax cuts for corporations and the wealthy but the loopholes haven’t been closed, so as a result they will just benefit even more.
Jonathan Williams: Well, you know, one person’s tax loophole is another person’s livelihood, right? So, that is one thing that depends on your definition of what a loophole is. So, let’s say the mortgage interest deduction or the deduction for state and local taxes paid — some would considered those loopholes that have been closed as part of the tax reform –which allow rates to come down for everyone. But, something that is all important to remember is the fact that businesses don’t pay taxes, people do. And getting the rates down on United States businesses from the highest in the world to some of the lowest is going to be helpful in terms of lower prices, higher income — wage income — and higher rates in our growth of 401k investments. So, it’s a win-win plan for employees and individuals.
Shawn Anderson (co-anchor): Final 20 seconds: Do you expect this plan to pass?
Jonathan Williams: Well, this is the opening act to the extended tax reform debate here in our nation’s capital. This is a good start, I think, but there’s lots of action to come both on the house floor and once it goes over to the senate side.
Hillary Howard (co-anchor): Alright, we appreciate you being with us. Thanks so much.
Jonathan Williams: Take care, thanks.
Hillary Howard (co-anchor): That’s Jonathan Williams, chief economist for the American Legislative Exchange Council.