Senate Republicans are expected to unveil their tax plan this week and while we don’t yet know the details, the rumors are that there will be $1.5 trillion in tax cuts over the 10-year budget window. Even days before the announcement, lawmakers are divided on some key issues. In a surprise move, Republicans are reportedly considering maintaining the top income tax bracket of 39.6 percent, which applies to ordinary income above $470K for married filing jointly (MFJ) and $418,400 for single filers. Earlier this month, the President said, “the rich will not be gaining at all with this plan…the wealthy will be pretty much where they are…If they have to go higher, they’ll go higher, frankly.”
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President Trump’s “new” tax plan looked an awful lot like his old one from the campaign, though with far fewer details. The one-page overview was more like an incomplete set of bullet points, than a blueprint. For example, the plan would reduce the number of tax brackets from seven to three - 10, 25 and 35 percent, but there was no breakdown of income levels to which the new rates would apply. It also intends to provide a break for child and dependent care expenses, but did not specify the dollar amount.
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"The simple message is the economy is doing well," Federal Reserve Board Chair Janet Yellen said in the press conference that followed the central bank’s third quarter-point rate hike in 15 months. She went on to say "We have confidence in the robustness of the economy and its resilience to shocks." You might be wondering what exactly “well” means. Let’s start with the long-term economic growth rate, which has averaged about three percent annually for the 50 years from 1966 through 2016.
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As President Obama leaves office, it’s time to reflect on how the economy fared during his tenure. Because of the size and complexity of the U.S. economy, I have generally believed that presidents take too much credit or blame for what occurs on their watch. In many cases, bad luck or good fortune can play a larger role in a particular president’s economic performance than actual policy.
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