In talking about tax reform, President Donald Trump recently said “we are on the verge of doing something very historic.” That might have been the most accurate statement he has made since taking office.
However, the question is, will it be historically good for all Americans? Or, is this yet another bone thrown to corporations and those living in one of the highest income tiers?
Until last week, most of the details were a closely held secret. After U.S. House speaker Paul Ryan and his ruling GOP unveiled the nuts and bolts of the plan Thursday, it seems to be something of a mixed bag with most of the goodies tilted toward business interests and those who are wealthy, but below the top 1 percent. Under this proposal, those in the top 1 percent would see no change in the nearly 40 percent tax they pay on earnings, though the estate tax the rich despise would be eliminated a few years down the road.
It seeks to permanently slash the corporate tax rate to 20 percent on the theory it will encourage businesses to hire more workers. The argument is that taxes those workers pay offset the loss of corporate tax revenue, lessening the need to cut spending on popular programs and not raise the federal debt.
Never miss a local story.
History shows us, however, that the “trickle down” strategy does not produce those results. For example, it ballooned the debt during the Ronald Reagan and George W. Bush administrations. And what guarantee do we have that companies will use the tax break to invest in jobs that pay a living wage rather than pocket the windfall?
Another detail that emerged is doubling the standard deduction, which would find wide appeal. What is certain to find resistance is the elimination of tax credits for people age 65 and older who are retired on disability and doing away with deductions for medical expenses for taxpayers of all ages. The House bill also repeals the adoption tax credit and deductions for tax preparation, alimony payments and moving expenses. Those changes are likely to draw complaints, especially from middle income earners.
Under this tax plan, those earning up to $24,000 will not owe any taxes.
Most adult Americans would be affected by tax reform. Probably the one thing we all agree on is we hate to pay taxes. However, it’s one of the most patriotic things we do. It gives every taxpayer a vested interest.
Many people also agree paying taxes is necessary if we want to live in a society that protects us from foreign invaders and domestic crime. Also, it’s necessary if we want quality education open to everyone, clean water and electricity, safe roads and air travel.
Those are just a few of the more obvious benefits of paying taxes.
Can we continue to have all that if we collectively pay less?
The answer varies based on who you ask, and depends on ancillary factors. Chief among them is how concerned are we about the federal debt? Common sense would tell us the debt is something that should cause concern, but some experts’ opinions vary drastically from the debt being extremely bad to it’s nothing to worry about. As with most things, the truth probably is somewhere in the middle.
The idea of tax reform is appealing. The current system is so confusing it has spurred a cottage industry. In the digital age, many people use software programs to prepare and file their taxes, and even the IRS offers that opportunity online. Other than those, such as tax preparers, who stand to lose business, who wouldn’t welcome a new, simpler tax code?
Factor in fatter paychecks because less of the money you earn would be withheld, and tax reform should enjoy near universal support.
But it doesn’t.
A big part of the problem is the stealthy approach used by Trump and Congress. Paul Ryan, who earlier presided over a razor-thin House passage of the Trump-endorsed GOP budget plan, and Senate Majority Leader Mitch McConnell have, until last week, shielded most of the tax overhaul blueprint from the public. Now they are racing the clock to get the bill signed into law before year’s end just so Trump and the GOP can brag about getting a major piece of legislation passed during the first year of his term.
In this case, Trump and the GOP should take a paraphrased page from the book of good journalism: The goal should be getting it right, not getting it done fast.
The House budget vote in late October, in which 20 Republicans joined all of the Democrats in opposition, was a crucial step in enacting tax reform. The Senate passed its version of the budget and now the two chambers will engage in a reconciliation procedure to include the tax measure. This limits public debate and prevents the Senate Democrats from thwarting it with a filibuster. With 52 seats in the senate, the GOP can lose two votes and still pass the legislation.
Shortly after the House vote Thursday, Rep. Matt Gaetz, R-Fla., said “House Republicans were ‘asked to vote for a budget that nobody believes in so we have the chance to vote for a tax bill that nobody’s read,’” according to The New York Times. That speaks volumes.
Two of the president’s allies are your neighbors.
His budget director, Mick Mulvaney, is an Indian Land resident. Rep. Ralph Norman of Rock Hill was elected to serve out the last year of the U.S. House term Mulvaney left to join Trump’s cabinet. Norman was among the Republican majority voting for the budget last month.
We think both of them owe it to you to prove this is a good plan. If Mulvaney and Norman are that confident the GOP’s plan is all it’s cracked up to be, it should not be difficult for them to show everyone why the tax overhaul they support is good for everyone. Show us the math. Let’s see the actual equation that proves this is a winning formula.
This is a question to which their constituents, today, should be demanding answers.
How to contact key players
If you want to ask public officials questions about the tax reform plan and let them know how you feel about it, here’s how:
▪ Mick Mulvaney, White House budget director: 202-395-4790, go to whitehouse.gov/omb/about to email
▪ U.S. Rep. Ralph Norman, Dist. 5: 202-225-550, go to norman.house.gov/contact/ to email
▪ U.S. Senator Lindsey Graham, 202-224-5972 go to lgraham.senate.gov to email
▪ U.S. Senator Tim Scott, 202- 224-2718, Scott_Press@scott.senate.gov