How To Make The Trump Tax Plan Passable
Trump’s tax plan seems to have been created with the right ideas in mind, but improvements are still needed. As of today, the blueprint is good for most, bad for the middle class, and potentially ugly for aspiring entrepreneurs.
As specifics of the Trump tax plan continue to roll out, it’s safe to say that the plan looks good at face value: doubling standard deductions, consolidating individual tax brackets, and lowering the corporate tax rate by 15 percent. That’s big league for the American taxpayer, and would be huge for the nation’s economy. This degree of tax reform is one of the many reasons America voted President Trump and the current Republican-led Congress into office. Indeed, the only way you can drain the swamp is if you plug the spring that feeds it: taxes.
Trump and the Republican Party campaigned in part on tax reform. They promised to help the middle class by guaranteeing that Americans would keep more money in their pockets instead of sending it to Washington. However, as details of the Trump tax reform proposal emerge, it’s apparent that the proposal may be a bad deal for some in the middle class. But instead of focusing on amending the current plan, a few Beltway politicians are already distracting the American people with theatrics. And that’s probably because there are new tax hikes hiding in that proposal.
Republican leaders have stressed the need for middle class tax cuts. Speaker of the House Paul Ryan (R–WI), Senate Majority Leader Mitch McConnell (R–Ky.), and President Trump have all embedded middle class tax relief into their talking points. They have produced a solid blueprint. What they haven’t done, however, is guaranteed said tax relief for all. It seems that they may even be backtracking on that exact notion.
Gary Cohn, Trump’s Chief Economic Adviser, said in an interview that he “can’t guarantee” middle-income families won’t pay more. Similarly, when pressed to promise tax cuts for all middle class Americans, Paul Ryan avoided to guarantee such reform. But if the Trump tax proposal does in fact cut taxes for all middle class Americans, why can’t these Republican leaders guarantee it? Probably because it doesn’t actually do that.
The Tax Policy Center did find that all income groups would see their taxes fall, on average. That’s what good about the Trump tax reform proposal. What the non-partisan organization also found, however, is the bad: about 30 percent of Americans in the $50,000–$150,000 income range would be paying more under the proposal. Since the proposal eliminates some local and state income tax deductions, many Americans will be left paying greater taxes every year. That doesn’t look like guaranteed cuts to me.
To make matters worse, the proposal could end up including more business tax hikes that will affect the middle class. In order to offset revenue decreases from the tax cuts, some have suggested Congress might “reform” the expensing of advertising by reducing the current, 100 percent business tax deduction for advertising expenses to only 50 percent. In other words, small businesses who rely on a full tax deductions for their advertising expenses will now only get half of that back. There’s nothing that screams “DC swamp” more than hidden taxes on small businesses and entrepreneurs.
Advertising spending in 2014 stimulated 20 million jobs, or 14 percent of U.S. employment. This private sector job growth is exactly what Washington should avoid taxing. At the end of the day, this advertising tax serves as a form of protectionism for big businesses who can afford to lose that extra income. With only 20 percent of new businesses making it to year two of operation, entrepreneurs rely on advertising to solidify their brand identity and grow their enterprise. Having a hidden advertising tax in Trump’s proposal would be downright ugly for aspiring entrepreneurs.
Only two Republicans can likely oppose the upcoming tax reform plan for it to pass. Without making it a bit more favorable to the middle class, the votes likely won’t be there.
Unfortunately, tax reform isn’t sexy. It doesn’t make for good cable news sound bites or social media fads. It does, however, impact the American economy and therefore all individuals. With a Republican-controlled Washington, now is the time for America to enact proper tax reform and it’s going to take more than a Snapchat filter to do it. We’re going to have to talk numbers, and not just partisan politics.
But not all politicians are taking part in the real-time political screenplay that is D.C.
While many politicians are behind the stage’s curtains prepping for their next scene, one Senator has been hard at work, cutting through the theatrics. Republican Senator Rand Paul holds a key vote on Trump’s tax proposal, and has expressed his concerns for its hidden taxes on the middle class. After all, independent, non-partisan organizations have expressed the same concerns as Paul.
With a Republican controlled Washington, Paul is ensuring that Congress enact quality policy solutions for America’s pressing issues. Just as he held Congress and the President accountable regarding healthcare reform, now he’s doing the same with tax policy. Although many Washington politicians have backtracked on their campaign promises, Paul continues to act on the commitments he made to his constituency: enacting great free market reform. Instead of blaming the Kentucky Senator for side-lining Trump’s agenda, hopefully Republicans will take notes on his commitment to completing more of it now. Most Republicans share the same goals; it’s now just a matter of convincing the skeptics that Congress can get more of the goals done at this time and under these conditions.
Matthew Boyer is the Media Relations Associate with Students For Liberty and a Policy Analyst for the Consumer Choice Center.
Perspectives expressed in op-eds are not those of The Daily Caller.