The US tax reform and the future US society

The new US tax reform has been released, and this could be seen the first major policy since Trump became the US president earlier this year. The tax reform focuses on the two parts, one is tax cuts, the other is simplifying the taxation system. Trump presented how the new tax form would look like, and from the photo posted, the new form would be much shorter and neater than the current one. The simplification of the taxation. This is very necessary as when the tax form becomes too complicated, the efficiency for taxpayers as well as the government would be poorer, it is more likely for taxpayers to pay miscalculated amounts of taxes.
However, the tax cuts need to be analysed more. The tax cuts could also be divided into two parts: one is the cuts in cooperation tax, the other is the cuts in income tax, especially for those who are very wealthy.Firstly, the cooperation tax is going to be cut, it means the profits gained by companies in the US are likely to increase. This encourages multinational companies to transfer their profits back to the US; however, considering there are some countries which have zero cooperation taxes, this effect may not be as great as the US government wants. However, this is definitely bullish for the stock market, as the costs for American companies will be lowered under the tax reform. Here comes with another issue that how the companies are going to do with the extra profits they get under the tax reform. Are they going to invest in production to boost the market supply? It depends on the individual incomes (which could be also influenced by the tax reform). If they do not find any investment opportunities in the economy, they may just use the cash they hold to conduct some buy back programmes, like what Apple did over the past several years. This could make their shareholders richer, but would not be necessarily helpful for the whole economy. Secondly, from individuals’ perspective, the tax reforms may benefit many middle and upper classes who are likely to save lots of money due to the tax cuts. Moreover, the minimum wage required for paying taxes is lifted, this is beneficial for many poor people. However, the issue of widening the wealth gap in the US society could not be ignored. Under the tax reform, the wealthiest people are benefited the most, the wealth gap between the wealthiest and the poorest would be larger and larger. This could increase the likelihood of social unrest when the gap is too wide.
To conclude, the cut in cooperation taxes would benefit the shareholders the most, and the cut in income taxes would benefit the wealthiest people the most; therefore, the wealthy people would become even richer under the new tax reform and the social wealth gap in the US would be widened.