Over the past eight years, the Obama administration had been characterized by moderate tax increases on the one percent of Americans who would fund a healthcare reform, reduce the budget deficit, and improve income equality. Barack Obama was faced with a difficult task to address the Great Recession and the mortgage crisis that had just destroyed many homes in families in the United States. His first term included a major stimulus, banking regulation, and comprehensive healthcare reform. Obama’s answer to the tax policy included the American Taxpayer Relief Act of 2012. This act kept a low tax rate for smaller incomes but raised the taxes for higher income workers. During the time, these ideals and principles seemed necessary to get the country out and moving in the right direction. However, after his first term, Obama failed to follow through with promises he made during his campaign including his healthcare reform when Obama’s second term ended. In 2016, the most controversial election took place. The candidates involved were Hilary Clinton and Donald Trump. Most of the population were completely against the candidate they didn’t support. However, after much debate, hacks, and deleted emails, Donald Trump had won the election on his promise to “Make America Great Again.” He also promised tax relief for the middle class, to simplify the tax code, to grow the American economy, and to keep the debt and deficit where it is. For or against Donald Trump, he is our president and Americans will see his visions come into play. Many programs and actions that occurred under the Obama administration are being torn down or replaced altogether. Through an understanding of how the Federal tax system works and its effects on the civilians of America, we can better understand Donald Trump’s decisions to cut taxes and how it will benefit the country and our economy.

To begin, it’s very important to understand taxes and how they work. Taxes can be best described as a compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of goods, services, and transactions. However, “Despite their passion and fury, contemporary Americans are remarkably clueless about how their tax system works” (Burman). If more were aware of how taxes worked, tax season might not seem so scary as everyone makes it seem. First, there are plenty of terms and lingo that can intimidate some people when trying to complete taxes themselves. Some of these words include, withholding allowances, tax brackets, marginal tax rate, and even tax deductions. A withholding allowance is the amount, it could be small or large, that an employer subtracts or “withholds” from a paycheck every payday. The more allowances a civilian can end up having, the less income tax their boss withholds.

 Next, we’ll cover tax brackets, it’s simple. An individual pays more income taxes the more money they make. And based on a person’s salary, they fall into a “bracket” that has a set rate that they pay in taxes. However, there is a catch, which is known as the marginal tax rate, which is the rate on the last dollar of income earned. Many people, including tax offices, mess up this process many times. The rate on the last dollar of income earned. So, for example, if you earn $20,000 a year and your single. According to the tax bracket you would have a 15% income tax. However, the first $8500 you earn falls under the 10% bracket. The remaining amount, which would be $11,500, would be charge the 15%. Finally, tax emptions, are specific amounts an individual gets to subtract from taxable income. There are two types of these exemptions: personal that you can claim if single with no dependents and dependent exemptions and one you can claim for each person you support financially. Now, it’s important to remain organized, which is the second hardest part about taxes, “It helps to keep track of important documents such as a W-2 from an employer, a 1099 – MISC form, 1099 Interest, 1098-E showing interest paid on student loans, 1098 showing interest paid on mortgages, and any documentation showing deductions like charitable contributions, medical expenses, and IRA contributions” (McKay). Now with this information, you must do is transfer it to tax forms called your 1040EZ, which is the easiest to fill out. However, there are versions of the forms that are required if you meet other requirements. Overall, after estimating your total assets from your total expenses and newfound taxes, you can see if Uncle Sam owes you any money back. People today are already confused by taxes, so they are also confused by Trump’s tax plan.

A main concern by citizens across America is the impact Donald Trump’s tax reform will have on the country. It is very important that individuals understand what Trump has in plan before making accusations about how it will affect country. To begin, Trump plans “tax relief for middle class Americans” (Trump). During his candidacy, Trump slammed Obama for the forgotten of the middle class. The American dream has seemed distant if not lost for many Americans, and they want to regain that sense of fulfillment once again. Secondly, the President wishes to simplify the tax code. In short, the headache that was explained in the previous paragraph will be easier and more condensed and people will keep more of their hard-earned money. Trump also wants to help the economy flourish yet again. Ever since the bank failures, it has been difficult to see the economy prosper without having to worry about what could happen the next day. To do this, jobs need to increase while maintaining the national budget and deficit where it is.

Lastly, Trump plans to keep the already high budget deficit and national debt exactly where it is. To achieve such goals, Trump includes in his tax reform, “If single and earn less then $25,000 a year or married and jointly earn less than $50,000, you will not pay income tax” (Trump). This will greatly benefit much of the lower class. Citizens will now have more money to use toward food, water, or housing, money that they would’ve had to give back to the government.  Not only will civilians save more of their money, but, “The President’s plan will lower rates for Americans in every tax bracket, simplify the tax code, and reduce the U.S. corporate tax rate, which is one of the highest in the world” (Rozsa). This will allow more companies to earn more profit and to expand more on what they have. Donald Trump believes that, “America needs a bold, simple and achievable plan based on conservative economic principles. This plan does that with needed tax relief for all Americans, especially the working poor and middle class” (Trump). With a growing economy, America can ensure prosperity and create a bigger and brighter future.

The most talked about importance of Donald Trump’s tax reform is how it will affect our economy. Some people are scared because the tax reform may lead to what’s called as inflation. Mr. Pettinger wrote, “People fail to realize that, with the decrease in an income tax, they are more susceptible to spending money, without knowing the prices are skyrocketing” (Pettinger). Because of this information, it can be clear that people should have the right to be worried. The value of the dollar could very well decrease, but because of the increased supply of cash, people will fail to realize the price of items will increase. This is a scary thought because if inflation rates rise too high, it can cause a recession. However, consumer confidence must also be high. And due to the crisis that America just experienced back in 2008, it’s easy to say that people still don’t feel comfortable taking out risky loans or investments that they may not be able to pay back in the future. This is a reason why companies find it difficult to lend money and invest in certain areas. 

What’s important is the way that companies are reacting to the changes that Donald Trump has in store. Because after all, they are the ones that are going to reap the benefits. The CEO of AT&T stated, “This could mean investing in faster deployment of new technologies like fiber optic internet” (Fiegerman). This support from a large company such as AT&T helps other companies realize the drastic changes and accomplishments they will soon be able to achieve through a tax reform. Also, if AT&T believes that they can innovate and design a better future for America, why can’t every company. Because companies can hold onto larger income amounts, more and more start-up companies that were hesitant to begin the process will emerge. This will lead to bigger and greater research and development for the United States in the United states, which touches another point, the outsourcing done by companies today that is crippling the economy. 

America, at one point in time, used to lead the steel industry throughout the world. We would produce, sell, and manufacture all within our borders. However, companies started figuring out that it would be a lot cheaper for them to make their products overseas and have them ship steel to America. While it was cheaper, the final product that was produced was horrendous in comparison to how Americans were making it. Still, companies did not care. With Donald Trump’s income tax decrease, these companies will soon realize that they’re not making as much money off overseas manufacturing and will hopefully once again bring companies back to the United States. The great idea behind that fact, is that it will not only be companies that will be coming to the United States, but it will be jobs as well. Hundreds and thousands of jobs that will jumpstart the economy. This is so important because a new job means more people going out to stores and buying clothes, food, furniture, homes, you name it. Every new job also means another person not trying to take your job. More money is circulating and companies get to hold onto more of that money, increasing wages for their workers and broadening their horizons. 

With these companies, it’s also important to understand that their stock market effects the economy in many ways. Commonly known, share prices of the stock market reflect what is happening in the economy. For example, a fear of recession could cause the share prices to fall. However, in Donald Trump’s case, they’ve done the exact opposite: “The stock market has risen about 9 percent since the election of Donald Trump with near a $2 trillion increase in wealth” (Moore). Many investors have praised Trump’s business policies and the success he has already made for the country. To get an idea of where the market is directed, “it’s wise to look at the historical parallel of the early years of another presidential disruptor: President Ronald Reagan” (Moore). During the beginning of his presidency, the American economy was booming. The national debt was declining and people were very happy. However, “Reagonomics” had hidden yet unavoidable conflicts that eventually became apparent to the nation: “It was not eye opening at first, but, with declining interest rates, a gradual, but steady drop in the dollar, moderate economic growth, low inflation, and financial confidence, the party turned sour” (Moffit). Speculators believe that Trump can learn from Reagan’s failures and successes to keep America booming for a long time. This way, the American dream, that has been forgotten for quite some time, can once again resurface.

The American dream has always been that no matter where you start, you can work your way to the top. However, many people of the lower class have faced income inequality. It’s proven that “countries with greater inequality of income, also tend to be countries in which a greater fraction of economic advantage and disadvantage is passed on from parents to children” (Corak 80). Kids that grow up in less fortunate areas or in poor situations find it much more difficult to be better off than their parents. This is mainly because poorer citizens are not able to pay for education. And yes, a higher education does usually tend to lead to a higher income, however, it’s usually too expensive for lower class individuals to pay to get that education. Because Donald Trump will cut income taxes for people of the lower class, it is very possible, that more and more less fortunate kids will be able to get into college. The extra money they save can be used to put their kids into programs that would benefit them and could encourage them to gain scholarships through schools that would make education more affordable to them. Growing up, these students are implanted with political views from their parents. These parties tend to separate the country and create different viewpoints that create disputes amongst these parties.    

Both political parties tend to pay more attention to certain aspects of politics than others. In the Republicans case, they tend to pay more attention to corporate issues and the economy and put problems of the environment on the back burner. However, I do believe that this is something that President Trump should try to focus on a little more. For example, Donald Trump removed regulations that allowed soot to be dumped into the ocean. Because of this, many environmentalists have wreaked havoc. They are interrogating Trump and giving him all kinds of problems on things that have not been new for a while. For example, “Coal’s demand has been declining long before Obama’s administration and even though Trump has campaigned and is trying to recover the industry itself by creating more jobs, it’s unlikely that it makes a comeback” (Corkery). However, I do believe that if the President wishes to try to bring back coal, he should do so with environmental tax reform. I understand that it’s important to protect the industry, because it will help the economy. But I do also believe that we need to protect the Earth because it provides for us what it does and sooner or later we will deplete of her resources. With an environmental tax reform, we can help the environment without damaging the economy. And in fact, “If polluters produced lower quantities of emission, they would receive a lower tax rate” (Bosquet). Therefore, we could reduce or create a greener process to start the coal industry back up which would create more jobs and a healthier earth. However, this is not something Trump campaigned on, which is why Americans must not expect such quick action to take place. In fact, many people, including many Hilary Clinton supporters, are upset by the new President’s ideas for the country.

Although Trump has put many of his promises into place, there are plenty of people that are entirely against him, most of which are considered liberals. These individuals do not believe that Trump will follow through with his promises and doesn’t intend to help America. Some believe he will do the opposite of what he has proposed. However, Trump believes there needs to be an “immediate impact on American workers through individual tax reforms” (Williams). However, the individual tax reforms could potentially worsen the economy and lead to similar events back in 2008. Although President Trump intends to help the middle-class worker that was forgotten, the reform, “gives 47% of a tax break to the top 1%” (Williams). This will only worsen the income equality that was explained earlier in the essay. A lot of money from the top 1% goes towards lots of public funding and it can go a long way. Wealthy individuals get to hold onto more of their money, therefore, there will be fewer tax dollars to put towards education or to improve roads or bridges. In addition, many people feel, “nothing said by the president or his surrogates suggests that they have any intention of reworking the basic structure of our income tax system, individual or corporate, so that it raises the most revenue with the least economic interference” (Johnston). Americans feel that although he has strong arguments on political issues, he does not fully understand how politics work. For example, “The two functions that Trump named… are activities that fall within the states’ political power” (Brown). Trump is battling the normal procedures done by the president and is trying make it more effective, however many people question his ability to lead the country due to his ignorance of the government system that has been the basis of the country ever since the constitution.

Donald Trump has essentially raised the question, what can taxes do for you? Citizens have deduced their own opinions on how they believe the tax system should be operated but, they must realize how the tax reform will greatly benefit their family financial situation. Taxes not only help pay for the education of your children, but for safety of you communities through policeman and fireman, and help fund diplomacy with other countries. When Donald Trump issues his new Tax Reform it will jumpstart the economy, jobs will begin to increase, companies will innovate, and productions will hopefully be brought back to America. The Obama administration has made it difficult for Trump to make put provisions in place. But, any President that is new to the White house, usually finds it troubling to take over the reins and to get things moving, especially a change in political party. However, after a period of time, it will get easier to assert actions into place and to make “greater” things happen particularly in terms of taxes.   

 