Will Gop Tax Plans Benefit the Wealthy Over Middle Class? Professors Weigh in

Article ID: 685217

Released: 14-Nov-2017 4:25 PM EST

Source Newsroom: Northwestern University

Expert Pitch
  • Credit: Northwestern University

    Monica Prasad

  • Credit: Northwestern University

    Charlotte Crane

EVANSTON, Ill. --- Will the GOP tax plans benefit wealthy corporations over middle class tax payers? From corporate tax reform to the payroll tax, the following professors are available to comment on various aspects of the plans.

Monica Prasad is a professor of sociology in the Weinberg College of Arts and Sciences at Northwestern University. Her areas of interest include comparative historical sociology, economic sociology and political sociology. She has published books and articles on the rise of neoliberalism, the development of tax systems, the effects of carbon taxes and the persistence of poverty in America. She can be reached at  m-prasad@northwestern.edu or 847-491-3899.

Quote from Professor Prasad
“The Republicans have boxed themselves into a corner where they need to pass a tax reform to show they can achieve their legislative priorities, and they need to find a way to cut middle class taxes to prove this isn’t a tax cut for the rich. But it’s tougher to cut middle class taxes than you would think, because the wealthy still pay the bulk of income taxes. 

“Cutting taxes that fall more heavily on the middle classes and the poor, such as payroll taxes, is politically difficult because those taxes pay for Medicare and Social Security. Thus the spectacle of the Republicans trying desperately to squeeze a middle class tax cut out of what could very easily become a tax cut only for the wealthy.

“Whatever you think about taxes, the more frightening specter is what happens if the Republicans don’t get this bill through. In that scenario, they will be entering the 2018 elections with nothing to stand on other than xenophobia.”

Charlotte Crane, professor of law at Northwestern Pritzker School of Law, is an expert in the area of tax law. Her areas of expertise include corporate taxation, tax policy, federal taxation and state and local taxation. She can be reached atccrane@law.northwestern.edu or 312-503-4528.

Quote from Professor Crane
“Some in Congress are still too interested in symbolic gestures and sound bites for their proposals for tax reform to be taken very seriously. 

“Regardless of whether you think genuine tax reform should be targeted toward lower overall tax burdens, more transparency regarding the allocation of those burdens, or less distortionary effects from those burdens on the economy, it is hard to be optimistic about the chances that Congress will produce a bill that makes significant steps in the right direction. 

“Both the House and Senate bills try to address the biggest current challenge to tax administration, which is the disparate treatment of business income depending upon whether it is earned by an individual, a pass-through or a corporation. Both chambers’ approaches would lower the corporate rate. But both also try to appease businesses that would be unable to take advantage of this lowered corporate rate because their income streams aren’t subject to the corporate tax anyway. Although the approaches to appeasing these businesses are different -- the House bill would offer a favorable rate to income deemed to come from capital investment while the Senate bill offers a deduction for domestic production -- both involve preserving distinctions among income streams that should not be preserved and create new distinctions that are likely to be unenforceable.

“Unfortunately, neither Chambers’ approach will effect a sensible change unless Congress can move away from its fixation on avoiding too much change in tax burden for taxpayers who do not rely on public sources of capital and instead embrace a more coherent approach to the taxation of businesses across the board.”


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