For all of you who read this blog, I want you to know that the basis for good Republicans who have remained silent in the face of things they must find objectionable at best, is now revealed. It is the big new tax cut that was just unveiled by the House Leadership. For this is the keystone of all they believe in. Tax cuts will bring economic growth unlike we have ever seen in America.
Perhaps we have never seen it because all other major tax cuts failed to produce the growth that is predicted with this one. The idea that money repatriated will somehow produce good paying jobs rather than extra dividends which will raise the price of the stock of the company repatriating the profits is not quite like day following night. What is alarming, however, is the decision to eliminate most deductions for state and local taxes. This is currently being justified within Republican circles as impacting Democrat-leaning states which in many cases have higher local taxes. Not the most compelling argument as to the future of the nation.
There is a basis for the current deduction and, actually, it is a Republican concept. The idea is why should you have to pay taxes on money you have already spent on taxes? I understand there is considerable debate about whether this is an appropriate deduction. The same can be said for mortgage interest and retirement funds. In fact, any deduction should be subject to scrutiny in terms of how it helps or hurts the country as a whole. Thus, it is curious that “carried interest” preferred treatment of hedge fund managers income, which the President said was a “disgrace” somehow didn’t make it to the cutting table.
We now have Paul Ryan’s moment. He has presented himself and been accepted as the intellectual leader of the Republican rebooting of the economy. His efforts here quite frankly resemble a meeting of the Chamber of Commerce Legislative Committee, rather than a bold and innovative way to create more equity and opportunity in America.
Perhaps I am wrong, but I think this will not become law without major changes. It has nothing new except it may help some struggling people pay less federal taxes (which is good) but if they live in the wrong state they may pay more in total. I doubt if they are going to benefit from the elimination of the Alternative Minimum Tax in a few years or the elimination of estate taxes for estates over 11 million dollars. But we know who will. It seems to me that we ought to require something of those people and entities that are meant to receive the giant windfall this bill creates. But those folks who don’t care about those carve-outs didn’t have lobbyists working with the tax writes over the last few months.
Remember when Donald Trump was going to drain the swamp? Looks like we are all about to be swamped. Better hang on, it will be an ugly ride.