Thursday, November 02, 2017
Political Mayhem Thursday: The Tax Plan
Supposedly, the House Republican leadership will unveil their tax plan today. I won't express much of an opinion on it, since... you know, we don't know what is in it. But maybe by the time you read this we will, and I welcome your comments.
The versions that have been bandied around do raise two concerns for me. Maybe the final version will assuage these doubts, but I would be surprised:
1) I do worry about the deficit. I have for a long time. I have talked about that a lot here. Given President Trump's insistence on a cut in corporate taxation to a 20% rate (from 35%), none of the proposals up to this point have gotten around the fact that they will likely exacerbate the debt.
2) Income inequality was a huge issue for both Republicans and Democrats in the last election. It sure seems like the tax proposals under consideration would make that inequality worse.
What do you think?
The versions that have been bandied around do raise two concerns for me. Maybe the final version will assuage these doubts, but I would be surprised:
1) I do worry about the deficit. I have for a long time. I have talked about that a lot here. Given President Trump's insistence on a cut in corporate taxation to a 20% rate (from 35%), none of the proposals up to this point have gotten around the fact that they will likely exacerbate the debt.
2) Income inequality was a huge issue for both Republicans and Democrats in the last election. It sure seems like the tax proposals under consideration would make that inequality worse.
What do you think?
Comments:
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"The Tax Plan" is just coming out from secret meetings.
The republican's will shortly reveal a donor enhancement program. It will feature the usual gifts to their donor base, investors and lenders.
We will not hear that corporate tax cuts on profits will decrease incentives for investing in long term growth and wages, which reduce pre-tax profits. This is not a job creation idea.
Our economy works in cycles and we are riding on a long growth wave which reached a high of over 4% GDP growth in 2015. It is still high but is now flattening, Without a larger pool of consumers and export markets growth is at a max. Increasing the market for our goods and GDP growth will depend on increasing immigration and aggressive trade policy. This will not happen under Republican leadership.
The plans from congress will be based on tragically weak economic logic and often false claims. We will hear proclamation of fairness as they just move money around.
This is a serious mistake. To reduce taxes on the high end of this cycle will leave us with few tools to use as the cycle turns down. At all levels of government we have postponed essential public investments. If these two two possibilities occur the Republicans will again create huge deficits as they continue to dig a hole for the country and their party.
Without a bipartisan process they will be be seen as solely responsible for the coming disasters. It won't be a pretty picture now that Obamacare has ended, Trumpcare is failing us and we are facing a potentially weakening economy without a clear long term plan. SAD.
The republican's will shortly reveal a donor enhancement program. It will feature the usual gifts to their donor base, investors and lenders.
We will not hear that corporate tax cuts on profits will decrease incentives for investing in long term growth and wages, which reduce pre-tax profits. This is not a job creation idea.
Our economy works in cycles and we are riding on a long growth wave which reached a high of over 4% GDP growth in 2015. It is still high but is now flattening, Without a larger pool of consumers and export markets growth is at a max. Increasing the market for our goods and GDP growth will depend on increasing immigration and aggressive trade policy. This will not happen under Republican leadership.
The plans from congress will be based on tragically weak economic logic and often false claims. We will hear proclamation of fairness as they just move money around.
This is a serious mistake. To reduce taxes on the high end of this cycle will leave us with few tools to use as the cycle turns down. At all levels of government we have postponed essential public investments. If these two two possibilities occur the Republicans will again create huge deficits as they continue to dig a hole for the country and their party.
Without a bipartisan process they will be be seen as solely responsible for the coming disasters. It won't be a pretty picture now that Obamacare has ended, Trumpcare is failing us and we are facing a potentially weakening economy without a clear long term plan. SAD.
Why is it that nobody cares to challenge the fact that trickle down taxation means plutocrats get the actual benefits while the rest of us get the promise of benefits. Also let’s not forget, quoting NY Times Gail Collins, “somewhere tonight there’s a child with a $30 million inheritance who needs our help.” Sad indeed!
The plan strikes me a something of a compromise, not necessarily between Republicans and Democrats (heaven forbid!) but between Republicans and Trump/Populists/Republicans in high-tax tax states. In that regard, the plan is not all that earth shattering, and it's sure to be watered down more before it becomes passable. Individual rates are not altered significantly (down a bit for middle earners, up a little bit for high earners). Pass-through rates go down, but not for pass-through income that functions like salary (e.g., law firm partner distributions). The biggest change is the corporate rate. But whether its even a change at all has everything to do with the myriad deductions and credits that render today's 35% rate a complete farce, and I haven't seen enough detail to know.
What this plan does not appear to do, contrary to decades of Republican promises, is "simplify the code." And as long as we preserve a tax model that relies on 75,000 pages of rules, we can be sure that politicians will use it for political ends rather than, say, securing the public fisc.
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What this plan does not appear to do, contrary to decades of Republican promises, is "simplify the code." And as long as we preserve a tax model that relies on 75,000 pages of rules, we can be sure that politicians will use it for political ends rather than, say, securing the public fisc.
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