DES MOINES, Iowa — “We`ve tried this trickle down theory before and it just doesn`t work,” said John Doherty of West Des Moines. “Corporations just get richer and unless you’re invested in the stock market, and can get some of the dividends or return on investments, they don’t hire more people. It just doesn’t seem to work that way.”
Where you stand politically, ideologically, and philosophically will impact on how you feel about the tax bill and how you think it will affect the economy.
“I don`t understand why the corporations are getting such a big tax break when so many of them are doing so well right now and there`s so many people that are struggling just to make ends meet,” said Doherty. “I think it ought to be going more to the middle class or even the working poor.”
But Kathleen Cunningham of Urbandale said Ronald Reagan believed in trickle down economics and she’s right there with him.
“I`m really for the tax bill,” said Cunningham. “I think everybody`s going to benefit from the tax break.”
Who will benefit and how much they will benefit varies greatly from one taxpayer to the other depending on lots of different variables.
But the bottom line is, according Stephen Gara, the Director of the School of Accounting at Drake University, overall, rates are going down.
“Most folks will see a degree, modest or maybe larger, increase in their take home pay, because the drop in rates is going to obviously impact the amount of tax being taken out of your pay check, so less will be taken out,” said Gara.
For individual filers, the bill preserves seven tax brackets, but changes the rates that apply to: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Today’s rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
According to the White House, this is what tax cuts will mean for the typical American household:
Here is the president`s case by the numbers:
$2,000+: what the typical family of four earning $75,000 would see in income tax cuts, slashing its tax bill in half
$4,000: how much incomes are expected to rise across the board as a result of tax cuts on u.s. businesses
3 percent: the level of growth the u.s. economy has already reached in 2017 and tax reform would take it even further.
Those are projections the White House is making, but of course, claims about economic growth are based on the assumption that businesses will take their increased savings and extra cash flow and reinvest that money; buy more equipment, hire more workers, increase wages etc. The other option is corporations could use that money to pay down debt or provide increased returns or dividends to investors.
What corporations will in fact actually do is the $1.5 trillion question.