So how exactly is a Trump presidency good? Well in brief, corporate regulations are going to be removed, less tax brackets for America, the WALL, and import taxes to pay for the wall. In theory the idea is that corporate regulations will mean more opportunity to expand, fewer tax brackets mean tax cuts for everyone, the wall to keep out illegals, and the import taxes to pay for the wall. So what’s the problem?
Tax Brackets
Let’s start with the fewer tax brackets. With 3 brackets instead of 7 it is going to even the playing field a little more. This means that the average family is going to save a couple hundred dollars every year, but it also means that the rich are going to save a couple hundred thousand, if not million, dollars per year. That’s good though, right? I mean on one end it means they have more money to create jobs. So it’s a win-win for everyone! WRONG! The sole purpose of a business is to have as few employees as possible. The sole purpose of a company is to be as cost efficient as possible. So why would they hire employees they don’t need? The only reason companies hire people is when rising consumer demand is greater that the companies’ ability to feed it. To put it simply, businesses hire people when they have to many customers and not enough cashiers. So if the money the rich are saving isn’t going to businesses, where is it going? To off-shore banks like Switzerland. If you don’t believe me look at where 2012 Presidential candidate Mitt Romney puts his money.
The Wall and How to Pay for It
Now to talk about the wall and the import tax to pay for the wall. First off, most illegals don’t come over illegally, they come over legally on planes with visas then just never leave. So let’s say the famous trump wall is built. How exactly is that bad? Let’s start with the current proposal Trump has to pay for the wall.
Well for starters the middle class and the poor are going to be paying for it. The current proposal Trump has is to put a 20% tax on imports from Mexico. Great, right? Wrong. Big businesses, like Walmart, will have to pay this 20% import tax on most of their inventory. This means that their profits are going to decrease a significant amount, unless they do something about it. So what do all businesses do when their costs go up? THEY RAISE THE PRICE. Walmart and other big businesses are not fools, they’re smart. When import taxes go up, so do prices of the product or service the company is offering. How else are they supposed to make up for the dramatic decrease in profit from the import tax? This means that the extra money these companies are going to make from consumers due to the price hike will go towards the import tax. So if the money from consumers is going to pay the import tax, and the import tax money is going to pay for the wall, doesn’t that mean that the middle class and the poor are going to pay for the wall? I’ll let you decide that one.
Corporate Regulations
This one doesn’t take too much thought, especially if you saw the movie “The Big Short.” In brief, the reason the 2008 housing crisis took place was due to no corporate regulation. This lack of corporate regulation led to a false sense of wealth which ultimately led to millions of Americans not being able to pay back their debt. This is what caused the whole U.S. economy to tank.
In Summary
Now that we have set the stage we can finally see how all these issues relate. The new tax brackets are going to give Americans a false sense of wealth. This false sense of wealth is going to lead to an increase in consumer spending. Like I talked about earlier, when consumer demands increase so does job creation. Also, that wall being built, new jobs! So there is your short term growth projection. Now, skip ahead a few years later. Consumers are suddenly realizing that they do not have the money to pay for all the luxuries they are buying. This means less consumer spending. Less consumer spending equals less job creation. It also means that the 20% import tax is no longer a viable option. With consumers spending less and less money businesses are not going to import as many things. With less imports leads to less import tax. Less import tax leads to less construction on the wall. Thus everything stops. Consumers can no longer purchase as many goods, businesses can no longer higher because of the decrease in consumer demand, thus a dramatic drop in spending for the wall.
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