08 Nov What Just Can’t Be Missed in the Present Tax Reform Situation
One of the most upsetting things about the present fight over tax reform is the oddly aligned friends and foes, created either by dishonesty, nuance, or in some cases, confusion. Let me explain.
The Democrat objection to the bill is worthy of four Pinocchio’s. They cannot be taken seriously. The bill has flaws, but they are the opposite of what the Dems are saying. This bill is a big middle class tax cut, and it is actually an increase on many, many high earners. The Democrats bash this as a tax break for the rich because that’s the only play in their playbook, and because they are lying. Understand this: If this tax bill said that the new tax rate for all people making over $300,000 per year was 100%, and for anyone under that, it was 0%, five minutes later Nancy Pelosi would call it a handout to the rich.
So there is dishonest objection, that must be repudiated.
There are also those who oppose corporate tax reform, or doubt the efficacy of a more competitive business tax code. They are wrong, but probably not due to dishonesty, but rather economic ignorance. The business tax reform side of this is why I’m so supportive of President Trump getting this victory. It is stimulative. It is smart. And it is well-crafted. And the beneficiaries will be laborers and consumers, along with other financial stakeholders. Win-win-win.
And to the extent the bill may have a problem, it is not in removing the State and Local Tax Deduction. As I wrote in National Review, this is “reformational.” It is good and it is fair. The deductibility at federal level of state tax encourages reckless state behavior, is anti-federalist, and wrong.
This is where the strange bedfellows kicks in. Or rather, right conclusion from wrong premise. The bill needs work, because it is purposely raising taxes on too many people, when it need not do so. The state deduction can (and should be) removed, without a net increase for millions of taxpayers.
Turn the marginal knobs.
Consider a sunset provision.
Get creative elsewhere.
But take the very good work of this bill, and protect it, by not ruining the hard-earned reputation of Republicans.
That is, we do a lot wrong, but we don’t raise taxes.