If the super-rich feel a bit bullish and middle-income breadwinners feel leery, it’s no wonder. Early versions of congressional Republicans’ “reform” plans are scented with greed. They hit some middle-class taxpayers and allow massive new deficit spending.
The House GOP described its effort as a way to kick-start economic growth, simplify the filing of IRS tax returns, and give tax relief to the middle class. Those are actually great goals, and the initial plan unveiled by GOP leaders this month offered a larger standard tax deduction as a way to simplify tax filing.
But the biggest winners are those who are already winning big. Analysis by independent groups show the plan cuts taxes far more for wealthy individuals, less for some middle- and low-income families, while letting corporations lower their tax bills without any assurance that jobs are created or that wages go up in the U.S. Some middle class payers would actually see bills rise over the next decade.
There’s also no assurance that corporations and wealthy individuals who stash profits off-shore in tax havens such as Bermuda will repatriate the loot they have hidden from the IRS. Just look at Apple, which moved one of its corporate tentacles from Ireland to the Isle of Jersey because its Irish hosts were cracking down on the tax dodging practice.
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The biggest gainers are individuals in the $100,000-$200,000 income bracket and those earning greater than $1 million, according to a report from the Wall Street Journal.
The Senate GOP plan is no more wholesome — if one believes in fairness and equity.
If we look closer to the effects in Washington state, we find the GOP plans hit many middle-income taxpayers. That is because the House wants to eliminate a deduction for state sales taxes, which is important in a non-income-tax state like ours. It also further limits mortgage interest deductions, caps property tax deductions at $10,000 and further limits deductions for medical expenses, casualty losses and student loans. Whether the doubled standard deduction is enough to cover that depends on the taxpayer.
Also, the “reform” would add potentially $1.5 trillion to national debt. That’s bold thinking by the majority party, which complained for eight years under President Obama that the national debt was ballooning. Funny that debt is now good under President Trump.
Lastly the GOP ends the alternative minimum tax, which is sure to benefit individuals like Trump (who earn a lot and take huge amounts of deductions). Is it not yet obvious to everyone that Trump should disclose his taxes? Does it not make sense to see how he gains from tax cuts mislabeled as “reform”?
The new value system in Washington, D.C., looks a lot like the old political swamp —just more extreme. A “fact sheet” handed out by the House GOP caucus last week implied that $450,000 in yearly pay could be considered low- or middle-class. Newsweek reported in its piece about this false characterization of middle class that the income band actually belongs to the top 0.5 percent of earners. The magazine went on to note that median U.S. household income is about $59,039.
At this point a heavy dose of oxygen is needed — to counteract effects of tax proposals that are pure helium, pure laughing gas for the well-to-do and powerful. Congress needs to slow down, allow an unhurried public vetting that shows beyond question who gains, who loses and whether there is, on balance, any greater societal good encouraged by reform.
It’s well known that trickle-down economics like those espoused in the Reagan era do not raise an economic tide that lifts all boats, and they create government debt. Loosely paraphrasing others, trickle-down is something usually found under pant legs.
As the tax cut proposals now stand, our Northwest Congressional delegation should fight them. Republicans and Democrats. These are foolish tax giveaways that ignore the revenue needs of legitimate government programs and serve to help those who are ably helping themselves to our country’s bounty.
We need a real tax reform plan that actually rewards work, spurs job creation, raises enough money to pay for legitimate government obligations, reduces exemptions, brings off-shore profits home, and is progressive in nature.
Fake reform pretends to do that but puts more in the pockets of super-wealthy and powerful interests. We know from experience that Wall Street’s chieftains and corporate executives love tax cuts. It’s not because they lead to hiring or even stock dividends, but because they promote corporate stock buybacks that promote higher equity prices.
Please someone tell us, how hard is it to understand what the right thing is to do here?