Call me skeptical. But when Republicans en masse start calling for a sweeping overhaul of the tax code, grab your wallet, button the back pocket and cinch up in a trench coat. I see a desperate political move, not “something really great,” for most of us.
I am more conservative by nature than liberal. I’ve lived a while, know there’s no free lunch. Somebody’s got to pay taxes to keep the government running. Everyone should pay their fair share — defining fair is the sticky part. I know whenever a new law is passed, there will be winners and losers.
I am open to the case that government’s too big and wasteful, so we should cut taxes and force government to shrink.
But I’ve seen this movie a few times. Governments rarely shrink. If they cut taxes, they just move money around from unpopular departments — like parks and environment — to favored departments like military, police and prisons. Deficits grow. And they almost always add new taxes to make up the shortfall. In any tax change someone always wins and someone loses. Always.
Given the current climate politically, and having watched our president repeatedly say one thing and do the opposite, excuse my skepticism when he pronounces a “sweeping overhaul of the tax code” and “really big tax cuts for the middle class,” then sends his spokeswoman out to explain how taxes work by using a story about 10 friends drinking beer. Whaaa?
How exactly does the Dealmaker stand to benefit from the coming windfall? Ummm. We don’t know because he refuses to release his tax returns. But you can bet it’s a three-way multi-million-dollar win for him.
Are we to believe Trump understands, or even considers, the masses who see “The American Dream” drifting a little farther away every year?
Take President Reagan, uber Republican of his day, and the father of “trickle down economics.” The idea there held that by cutting taxes on the wealthiest among us, they would be able to invest more in businesses and create jobs and wealth for the rest.
Well, it trickled down all right, like a kid who wets his pants. What didn’t trickle down was any wealth. That defied gravity, as an estimated $1 trillion was transferred from the middle class to the wealthiest Americans during that period because of shifting tax policy. A new class of billionaires was born, which now seems to rule the country like an oligarchy instead of a democratic republic.
When a magician does tricks, he always gets your attention with a visual trick to rivet your eyes away from what’s happening in the other hand.
In tax cut mode, the shiny prospect is lots more silver to the household of Average Joe(s). A sideshow acts as a distraction, i.e., the somber worry and wringing of hands over the added budget deficits these tax cuts will create. Surely we recognize how concerned the legislative body is!
What most don’t see are all the moves behind the back. New taxes spread across new things and new people. The net effect is little positive for Joe, and a great and a wonderful new tax rate for their high-paid cronies.
“The economy is desperate for a boost,” says Republican leadership. “We need to cut corporate tax rates in half to stimulate business! Slash higher tax brackets, so ultra wealthy investors have more to invest!” This is the rallying cry; despite low unemployment, a stock market soaring to all-time highs, and past tax cuts that never proved to work as a stimulant.
Who will benefit most from tax rate cuts for businesses? People who own large portfolios of stock, which will rise in value on the expectation of increased dividends created because of lower tax rates.
Did I mention $130 billion a year in added Federal deficits this cut is expected to create?
A few years ago the Republicans in Raleigh crowed about cutting the state income tax by 1⁄4 percent. Everyone would be so much better off keeping more of their money, though the cut represented only $100 a year to Average Joe.
Hidden in the other hand were a host of deductions no longer allowed on the tax return. I asked 25 friends about their experience that season, and every one vowed they paid significantly more in state income taxes after the rate reduction! State coffers swelled with surpluses, and no wonder.
So, don’t cheer for a naked tax cut. Keep your eye on the slight hand, the one that’s going to juggle your 401(k) plan, mortgage deduction, charitable giving, business-to-business purchases, and state income and property tax deductions. The new oligarchy has been tilting the playing field for a long time. For most of us, it’s a zero sum game.
Here’s a “sweeping overhaul” that would simplify taxes, lower tax rates for nearly everyone, and deliver the revenue. Why not figure what percentage each household and business in the U.S. would need to pay, charge everyone that rate, and be done with it?
But that would require a level field, wouldn’t it?
Pat Taylor is advertising director of The Pilot.