Breaking down the GOP tax plan
BERRIEN SPRINGS, Mich. -- Congressman Fred Upton has been named to the committee of senators and representatives who will work to combine the two Republican tax bills. An Andrews University business professor weighed in on the plan as it gets worked out.
“When you have a chance to get extra money, then you can really hire more people, people tend to pay more respect to you, then the stockholders [are] going to go with you,” said Dr. Jerry Chi, the assistant dean of Andrews University’s business school. “All of a sudden, you have, suddenly, the credibility that people really want to pay their due respect to you.”
Dr. Chi said Republicans’ plan to lower the corporate income tax rate from 35 percent to around 20 percent is what stands out to him.
He said a lowered corporate rate is bait to entice more companies to bring their money back to America.
“They would feel so motivated to move money back here and then to produce the product right here,” Dr. Chi said.
But he admits that the core principles of the GOP tax plan are based largely on faith in companies and high earners.
Republican lawmakers argue cutting taxes for the wealthy and for companies means more investment, which could in turn mean more economic growth for everyone. But that’s not guaranteed.
Dr. Chi said, in his opinion, giving the middle and upper class more tax breaks will be more beneficial than cutting costs for the lower class.
“This way really tries to encourage those people with the knowledge, with education – in the middle class and upper class – to what? To make a better investment and then create business, create jobs,” he said. “And then the idea is try to entice or motivate, to hire those low income people.”
Dr. Chi kept saying this could only work out if people on the receiving end of these tax cuts feel inspired or obligated to pump that extra money right back into the economy, rather than putting it in their own wallets.
Click here to hear Congressman Upton talk about a portion of the tax bill.