‘They’re going to be sailing off into the horizon, laughing all the way’

‘They’re going to be sailing off into the horizon, laughing all the way’

Kelly Conklin and his spouse, Kip, are the co-owners of a custom woodworking business in Bloomfield, New Jersey.  They’ve owned the business since 1978, and employ 16 well-paid workers.  Now they view their livelihood as threatened – by President Trump’s proposal to slash taxes for the wealthiest Americans and corporations.

Last year, Kelly says, his business had a very successful year and he paid a federal tax rate of about 25 percent.  Under Trump’s proposal, his business would still be subject to a 25 percent rate, but his tax burden would rise significantly – because he would no longer be able to deduct his local property taxes from his federal tax debt.  Kelly is not alone in this regard – the Tax Foundation has estimated that if, as Trump proposes, state and local taxes are no longer deductible, the federal government would collect an extra $1.3 trillion over the next decade.  The move would particularly hurt tax payers in relatively high tax states, including New Jersey, California, New York, Illinois and Pennsylvania.

On Wednesday, Kelly participated in a news conference organized by the Main Street Alliance and the Center for American Progress Action Fund to oppose the tax and budget plan pending in the Senate.

“There is equality when everyone’s boat is lifted,” Kelly said.  “This tax policy would sink everyone’s boat except for the rich and wealthy.  They’re going to be sailing off into the horizon, laughing all the way.”

He adds, “Main Street business owners just don’t benefit from tax cuts to millionaires and billionaires.”

The Trump tax plan would let businesses that pay taxes through the individual income tax (so-called “pass-through businesses”) pay a maximum rate of 25 percent.  That would be a big savings for law firms and other companies with high enough earnings to be subject now to maximum tax rates of 35 or 39.6 percent.  As noted, it wouldn’t save Kelly and Kip anything, and it would do nothing for the 86 percent of small businesses that do not earn enough to get past the 25 percent bracket.  (Note:  President Trump’s business arrangements are said to include about 500 pass-through business entities – so many that this tax provision is known as the “Trump loophole.”)

In Kelly’s case, he would take a hit not just because his annual federal tax bill would rise, but also because his home – whose equity he and his spouse will depend on when they retire – would lose value, because of the property tax deduction elimination.

But there is another, more indirect way Kelly and his business would suffer.

Sapna Mehta, Legislative Policy Director for the Main Street Alliance, notes that the Senate legislation includes sweeping cuts to programs such as Medicaid, nutrition assistance, and Supplemental Security Income.

If these programs are cut, she notes, families will be forced to pay more for vital things like health care and food.  That means they will have fewer disposable dollars to spend with businesses such as Kelly’s – another hit.

Also joining the news conference Wednesday was Rep. Bill Pascrell, D-NJ, a senior member of the House Ways and Means Committee.   “Their plan favors large corporations over small business and it’s not even close,” he said.

Source: https://www.chn.org/2017/10/11/theyre-going-sailing-off-horizon-laughing-way/