The recent tax reforms which passed in the US have been controversial to say the least, and are sure to change the lives of many people across America. The reforms have changed the amount of tax both individuals and corporations will pay, and are sure to prove fairly divisive. The Bill led to some minor protests, but was hailed as a major victory by Republicans. Here are some of the ways the tax bill may affect America.
Corporations Much Richer
Corporation tax has been drastically cut, from 35 per cent to 21 per cent, meaning that corporations will ultimately have much more money to play with. Whilst this could lead to growth opportunities for them, it also means that smaller businesses may suffer from the increased capabilities of corporations.
Since corporations generate large amounts of revenue, the cut in corporation tax will be of most significance to them, as they will be proportionally much better off. This may now mean that they will be able to expand at a much faster rate, and choke the expansion opportunities for smaller businesses. They may also have to be subject to larger, more comprehensive audits from firms like RSM.
Poorer Worse Off
One of the heaviest criticisms this bill has drawn is that the poorer population of America will be worse off, whilst the richer benefit. This could serve to greatly worsen social divides and mobility, and increase overall inequality for the foreseeable future.
Once the full effects become clear, it may also weaken support for the Republican Party, which already had a fairly slim majority. Should the Democrats win in the next election, this tax bill could be short-lived if they manage to overturn it in the coming years.
The tax bill will also increase the deficit by around $2.2 trillion over ten years, which is sure to cause further controversies (and potentially complications) in the years to come. This may be offset by an increase in spending, however, as the people benefiting from the tax bill will have more money overall.
Even so, it shows just how much the economic and financial landscape will change with the introduction of this bill.
Overall, it is hard to say exactly what long-term effects this bill will have on America. It is fair to say, though, that it is one of the most significant bills in recent times, and it is sure to have a major impact on everyone who currently pays tax in the US.