The Other Side Of The Coin

House Republicans have just released their proposed tax code rewrite. Experts are rushing to digest the proposal and perform the difficult task of assessing how this Republican bill will impact Americans. Wait, wait… if you are wealthy, you do not need to worry. This Republican plan will treat you well and provide opportunities for clever tax advisors to find new ways to save you tax payments.

The bill provides most (but not all) the gifts the rich have been expecting. The top bracket of 39.5% remains although the income threshold has been raised to $1,000,000 allegedly in deference to the “gift to the wealthy” optics.  Carried interest, estate tax elimination, and reduction of corporate taxes (35% to 20%) for private owner businesses will provide the wealthy with plenty of tax relief opportunities while the tax burden is shifted to lower income Americans.  And, for those unfortunate Americans earning $500,000 to $999,999, you will just have to pay in a lower bracket.

The deal is not set yet. Republicans from high tax States will argue for sweeteners in the restoration of State and local tax deductions and full credit for mortgage interest. Lobbyists representing all sorts of industries will go into full court press to preserve other deductions and credits. It is entirely possible that this attempt at tax code changes will stall or fail outright.

But it is entirely possible that this proposal or something substantially the same will pass. What then?

For sure it is maddening that very wealthy people like the Koch Brothers and Robert Mercer will pay less taxes.  It is maddening that as a consequence, the tax burden will shift to less wealthy people (like the Middle Class), or the cost of this tax cut will flow to the national debt, or both.

But that is not the real damage that this tax code change will bring.

A coin has two sides. On one side, heads, is the smiling faces of Americans paying less in taxes. The other side, tails, however, means there will be less government revenue to cover already approved government spending. Let there be no mistake, with lower tax revenues there must be less government spending sooner or later.

Republicans will be quick to assert that there are all sorts of waste and corruption in government spending. Why, Republicans will point out that there are able bodied Americans drawing social security disability benefits who could be working. And look at Medicaid excesses associated with the Affordable Care Act. And, with their faces now reddened, Republicans will bluster about spending in all sorts of other areas. Surely, cutting wasted money can be made.

Maybe. The problem usually boils down to which programs are viewed as wasted spending and what justification makes those expenditures “wasted”.

For example, Republicans have attacked the Affordable Care Act (train wreck, a jobs disaster) even though there were some 20 million more Americans insured with Obamacare than before. And, what have Republicans offered? Their best proposals offer less coverage and insure 10-15 million fewer Americans.

So, when it comes time to submit “post tax cut” Federal Budgets, what makes anyone think Republicans won’t feel that reducing programs which benefit all but the rich will be perfect targets?

The theme which comes up time and again is that there are no free lunches. Republicans are breathlessly trying to sell this tax code change as great for the middle class and the key to unlocking our economy, and best of all, there will be no cost to average Americans.

Really?

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Explore posts in the same categories: affordable care act, congress, Conservatives, Donald Trump, federal debt, GOP, Healthcare, Koch Brothers, Politics, Republican Party, taxes, Uncategorized

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