But what is good for me is not always good for the country.
I am a true Republican, and I am a fiscal conservative. But being a conservative does NOT mean that we simply want to cut taxes willy-nilly. A conservative is a good steward of the public’s money, and is fiscally responsible, ensuring all funds spend are necessary and efficiently used. But it is NOT fiscally responsible to cut taxes to the point that the deficit skyrockets. It is NOT fiscally responsible to cut taxes to the point that essential services must be cut back.
Our leaders have a fiduciary duty to put the good of the country over their own personal wants and needs, and today the GOP has failed this test miserably. In fact, this tax cut scheme fails the smell test in almost every way.
The GOP is pushing this scheme for two reasons, both of which are self-serving and bad for America:
(1) The GOP has failed to pass any major legislation this year, and is desperate to be able to claim to have done something, regardless of whether it helps the average American or not, and
(2) It delivers huge tax cuts to the Trump family, as well as the wealthy donors who bought and paid for the GOP politicians.
Even worse, the GOP is attempting to push this scheme through quickly before people figure it out.
They are doing this by selling us LIES.
LIE #1: Donald Trump stated that this plan would NOT benefit him. But the elimination of the Estate tax will save his family over $1 BILLION dollars. That sounds like a benefit to me. This scheme also eliminates the Alternative Minimum Tax. The purpose of this tax is to ensure that wealthy people cannot take advantage of so many loopholes that they would owe little or no taxes. It guarantees that they will pay SOME taxes based on actual cash flow. In 2005, Donald Trump would have personally paid NO taxes if it had not been for the Alternative Minimum Tax.
These two taxes only effect the wealthy. Estates under $5 million ($10 million for married couples) are not taxed at all. Eliminating these two taxes does NOTHING to help the middle class. It only helps the rich!
LIE #2: We need these tax cuts to get our economy going again. But our economy is ALREADY going great! It was been growing at a steady rate for over 100 months now; one of the longest sustained growth periods in our history. It has continued its growth since President Trump took office, maybe even growing a little faster! Indeed, Trump himself tweets often about how great the economy is and how low unemployment is, usually taking credit for all of it.
The GOP is saying that the economy is great except when talking about their tax scheme. Then, the economy sucks and needs a boost! Well, GOP, which is it?
We want a strong economy that grows steadily. What we do NOT want is a roller-coaster economy, also known as a boom-and-bust economy. When the economy is strong, the LAST thing you want to do is add additional stimulation. That is the time to RAISE taxes, not cut them. The time to cut taxes is when the economy is on a down-slide or in a recession.
But there is another, even more important reason NOT to cut taxes during a period of economic growth: If you cut taxes now, you lose the option to cut them later during the next recession.
LIE #3: Donald Trump promised to eliminate the deficit, reduce the debt, and improve our infrastructure. This tax scheme does just the opposite! Even conservative economists acknowledge that the deficit will skyrocket under this tax scheme. To improve our infrastructure, we need to raise MORE revenue, not cut taxes. That’s common sense 101! The same goes for eliminating the budget deficit. If you cannot balance the budget under a strong economy, how the hell do you propose to ever balance it? But Trump’s scheme that should not surprise us. He built his fortune by taking on huge debts, filing bankruptcy, and leaving other people holding the bag. But the U.S. is not a casino. We can’t declare bankruptcy. Every year the debt increases means we are leaving even more debt to our kids.
LIE #4: They are selling Trickle-down Economics. BUT TRICKLE-DOWN ECONOMICS DOES NOT WORK! It has been theorized that reducing taxes on the wealth will actually result in increased tax revenues, as the wealthy will take their tax savings and reinvest them into their businesses, resulting in increased revenues and increased taxes. Economist Arthur Laffer first proposed this back in the 1974, and Regain based his tax reform plan in the 80’s on it. This theory has been called “Trickle Down Economics” and “Voodoo Economics”.
But, time has shown that this theory DOES NOT WORK! Deficits soared after Reagan’s tax reforms. In fact, looking back over the past 40 years, whenever taxes have been raised, deficits are reduced, and deficits increase when taxes are cut. We have had only four years of surplus in the past 40 years, and three of those years were after Bill Clinton raised taxes. The last year we had a surplus was George W. Bush’s first year in office, before he had time to cut taxes. As soon as he did, it was back to deficits again!
So, if we want to increase spending on our infrastructure and reduce the deficit at the same time, taxes must be increased, not decreased.
There is also another, simpler, reason why this theory is flawed. Our government spends all of the taxes it collects. Voodoo Economics suggest that the economy will spurred by the wealth taking their tax savings and putting it back into the economy. But, our government is already doing that with those tax dollars! For example, if our government collects $100 in taxes, it spends that money, resulting in $100 being put back into the economy. But, if taxes are reduced to $80, the government only puts $80 back into the economy. The rich person who now has an extra $20 because of reduced taxes can choose to put some or all of that $20 back into the economy. If he puts ALL of it back into the economy, that means that the total amount put back into the economy is $100, which is exactly the same as it had been before the tax cuts. But, if the rich guy chooses not to put ALL of his tax savings back into the economy, the result is LESS money is put back into the economy than before the tax cuts!
LIE #5: It will reduce taxes for the middle class. Maybe. But a lot of middle-class folks will pay MORE under this tax scheme, especially families with multiple children.
LIE #6: Eliminating many of the tax deduction loopholes hurts the rich more than the poor. The fact is that many of the deductions, such as student loan interest, are phased out when incomes rise over $150,000 or so. Someone paying $7,500 in student loan interest making $75,000 per year can take a $7,500 deduction under the current tax law. Someone making $200,000 cannot take this deduction at all under the current tax law. Under Trump’s scheme, NO ONE can take the deduction. So who loses? Not the rich guy who never got the deduction in the first place. The one who loses is the guy who is struggling to pay student interest payments that are 10% of his total income!
LIE #7: We need to reduce taxes on businesses because we are the highest taxed nation in the world. Although the nominal tax rate is 35%, the effective tax rate, which is the actual rate business pay after all of their deductions and loopholes, is only 14% (22% when you add state, local and foreign taxes), which is among the lower rates in the industrialized world.
We need REAL TAX REFORM that will address our REAL ISSUES:
(1) We need to balance the budget.
(2) We need to improve our infrastructure.
(3) We need to address the growing gap between the rich and poor, and the shrinking middle class.
It’s time for the public to stand up and DEMAND that our leaders do what’s RIGHT FOR THE COUNTRY. Call your Representatives and Senators and make your voice heard. Tell them that they can listen to us now and do the right thing, or they will hear us loud and clear next November!
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