UAH taxation expert says Trump tax plan could push up interest r - WAFF-TV: News, Weather and Sports for Huntsville, AL

UAH taxation expert says Trump tax plan could push up interest rates

(Source: WAFF) (Source: WAFF)
HUNTSVILLE, AL (WAFF) -

President Donald Trump's tax cut plan that rolled out Tuesday includes reducing corporate tax rate to 15 percent. That includes all pass through businesses, which would see the rate knocked down from as much as 39.6 percent.

READ MORE: Trump tax plan could be good news for many, bad for deficit

The idea is to increase economic growth by cutting taxes for business owners who, with more money to spend, can then add workers or expand.

"It'd be a really, really significant tax cut if that income goes down from 39.6 percent to 15 percent. People have more money to spend, they spend. And a restaurant can hire more employees. They can add on an addition with that additional money," said Charlie Hickman, who is clinical associate professor of taxation at the University of Alabama in Huntsville.

Hickman added that the problem comes if lost tax revenue forces the federal government to borrow more money, resulting in higher interest rates that could hamper economic growth.

"Then it becomes more difficult for everyone to borrow. So if the government starts borrowing an additional half-trillion dollars a year, then that sucks a half-trillion dollars out of the credit market, and that makes loans more difficult to get, means interest rates go up. And if interest rates go up, then the rate the federal government pays on the national debt goes up," Hickman said.

He said he is confident there will be tax-cut package passed in some form.

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