Americans have had a few days to digest the Republican tax-reform proposal, and opinions on its potential impacts are about as widespread as the nation’s opinions on just about everything else.
Will the proposed cuts help Americans who need them most? For some, maybe. Will it help the 1-percent wealthiest citizens? For most, probably. Is it likely to be made into law in its present form? No, but it could happen.
Tax code overhaul proposals are like corn mazes — you don’t want to go in without knowing how to get out.
Yet, despite the potential complications, just about every president’s administration flirts with a tax-cut plan.
President Trump is touting this one as a big win for the American middle class, a claim that has yet to be supported by credible evidence.
It’s fairly certain that if the legislation passes, the wealthiest Americans will reap benefits. It’s also pretty clear that some middle-class families could benefit. Republican members of Congress say passage of the bill will increase a typical family of four’s annual income by just more than $1,800.
One must wonder at what cost will such meager savings be justified. The proposed cuts will contribute significantly to the national debt, adding from $1.2 trillion to more than $3 trillion, depending on whose calculations you choose.
That raises an interesting point: Republicans in Congress spent most of Barack Obama’s eight years in the White House complaining about Democrats running up the national debt. Now that the GOP is in charge of both houses of Congress and the presidency, increasing the debt doesn’t seem to be such a bad idea. What changed? Nothing, except whose ticket is being punched.
One prominent feature of the tax proposal is lowering the corporate tax rate from 35 percent to 20 percent, which some economists say could add $2 trillion to the national debt. Why is such a debt jump OK now when it was poison to Republicans for eight years? We’ve likely not heard the last of the no-new-debt hypocrisy.
In fact, Americans should buckle up for a very wild political ride in the coming weeks. President Trump has challenged Congress to get an agreed-upon tax-reform bill on his desk before year’s end. Given the chasm between majority Republicans and minority Democrats in the House and Senate, that timeline seems about as doable as having a chat with the man in the Moon.
Also, the proposal’s various elements will be vigorously debated, because no matter what the final product, some Americans are going to win, and others will lose.
For example, if the final bill keeps the provision for all-but-eliminating the mortgage interest deduction on more expensive homes, home owners in California and New York are going to be pretty steamed. GOP candidates understand that.
Real estate experts say such a rule could eviscerate some housing markets in those states, specifically, and hurt other states with lower median prices, but with pockets of high-end homes.
The president is calling this the “biggest” tax cut ever. Not even close. Even the much-maligned President Obama approved tax cuts devised by his predecessor George Bush that were almost twice as big as in the current GOP proposal.
If the legislation gets through Congress and the president approves, it will provide another test of the GOP’s old stand-by — trickle-down economics, which is a nice theory that has never really panned out.
Actually, the last time tax reform juiced up the U.S. economy was when President Clinton raised taxes. Go figure.