It certainly appears that Trump has more common sense and intelligence on taxes and the economy than many of those advising him, the career politicians from both parties, the bureaucrats, the media and most economists. I am a 64 year old CPA who has been doing taxes for approximately 40 years. This is the most intelligent tax policy I have seen since Ronald Reagan’s and my initial thoughts make me believe that it is better than Reagan’s. It is a simple and logical plan that would give everyone the incentive to earn more instead of spending so much time and money trying to beat the tax man. I believe the impetus it would give to economic growth is immeasurable.
The summary of what I have seen on President Trump’s tax plan looks like it would greatly help almost everyone and especially the overall economy. If the U.S makes the corporate tax rates more competitive, businesses in the U.S would have a great incentive to keep businesses here and/or to move business back from overseas. Foreign businesses would also have a greater incentive to move and build businesses here which is, after all, the biggest economy in the world. Regulatory relief also helps a lot. The lower the regulatory burden, the greater the likelihood that businesses will thrive and keep their prices competitive. If you lower the tax rate, get rid of a lot of the special interest deductions along with reducing regulations, businesses and individuals will become more productive, boosting the economy.
If you get rid of the alternative minimum tax (AMT), the estate tax, and many tax deductions and tax breaks, you take away the incentive to shelter income. The number of potential audits is greatly reduced, minimizing the cost of IRS. People and businesses would structure their personal lives and businesses without much regard for taxes which would make everything run more efficiently and effectively.
Democrats are already saying they are against Trump’s proposed tax policy changes. What a surprise.
Democrats seem to believe the money is all theirs. They decry any cut in taxes as if it was the government’s money in the first place. They call tax cuts a cost to the government. In contrast, when government entities increase taxes and fees, the media and Democrats talk about the additional revenue to the government, not the cost to individuals and businesses to pay the tax.
The following article points out that networks howl about the loss of revenue to the government. I do not recall them decrying the loss of money to individuals and businesses when government increase taxes and fees. Basically the media repeats Democratic talking points.
Democrats, including the media, believe the people work for the government instead of the government working for the people.
Democratic politicians and the media are so lacking in knowledge about economics that they don’t even comprehend that as they rail against trickle-down or supply side economics, it’s their own policies that are pure trickle-down economics. They believe that more money should go to the government, then they run the money through a major bureaucracy enriching the already huge government entities and finally, they trickle out a much smaller amount to their special interest groups which they claim generates jobs. It is a simple concept that the more money that is left in the private sector, the more potential there is for growth. It is too bad so many don’t understand.
The Democrats really don’t want a simple tax code. With a simplified tax code, politicians can’t bribe as many individuals and businesses with goodies. They can’t buy votes.
According to IRS, only a little over 30% of people itemized their deductions in 2013 and Trump wants to significantly increase the standard deduction along with lower the rates. Then he wants to eliminate and cap itemized deductions. Trump’s policy suggestions help almost everyone and simplify the code so much that most people should be able to fill out the tax forms themselves. Think of all the money that could be saved if they didn’t have to spend so much time and money on tax preparation and/or planning. The only people who may be hurt by limiting itemized deductions would be the truly rich. The poor and middle class will be helped, not hurt.
Then the public is continually fed the myth that when you cut rates that it costs the government. Bush’s across-the-board significant cuts in tax rates in 2003 showed that that was absolutely not true. Bush inherited a recession and a collapsing stock market when he took office in 2001. The economy was stagnant. Income tax revenues dropped from $1.2 trillion in fiscal year 2000 to $900 billion in fiscal 2003. Bush got his tax cuts approved in May 2003, the economy got a huge boost, and income tax revenues shot up to more than $1.5 trillion by FY2007. Rates were cut by around 10% across the board and revenues shot up over 60%. The CBO and other economists did not seem to understand the simple concept that the more money you leave in the hands of individuals, the more they have to spend, save and invest. All of that is more stimulating to the overall economy than having the government confiscate a continually greater share, and then picking winners and losers.
The kneejerk reaction of the Democrats and the media to such effective tax reform, seen whenever proposals to allow people and businesses to keep more of their own money is telling. They would rather have more people dependent on government than a growing, stimulated economy.
I have seen many economies that collapsed because the government got too big. (Venezuela is a current example. The Soviet Union was a previous example.) I do not believe I have ever seen an economy collapse because individuals and businesses have been able to keep a greater share of the money that they, not the government or politicians, earned.
The bad ideas I see on tax reform all relate to some sort of national sales tax. This can be in the form of a Value Added Tax (VAT) or the “fair tax” that former Arkansas Gov. Mike Huckaee supported. These are highly regressive taxes that will widen the wealth gap and destroy the U.S. consumer-driven economy. They complicate the tax system instead of simplify it. The border adjustment tax also sounds stupid because it is so complicated. The best border adjustment there would be is to stop double-taxing earnings that companies legitimately allocate to other countries. Double taxation is absolutely unfair.
Some Democrats in particular seem to be entertaining the idea of a VAT lately, which shows they really don’t care about simplicity or economic growth. They also seem to have little concern for the middle class and the poor because any VAT is highly regressive and reduces purchasing power.
Trump’s proposals are for an extremely progressive income tax system. It is truly a shame that the Democrats, including the media, are so intent on punishing those they have defined as rich that they don’t mind taking away important economic opportunities from the poor and middle class in the process.
Let’s give everyone a chance to move up the economic ladder. Trump’s simplification proposals certainly appear to enhance everyone’s opportunities.
Source: Jack Hellner @ American Thinker
Hellner is a CPA with more than forty years’ experience on tax matters.