America Needs Tax Cuts and Tax Reform, but Can the GOP Deliver?

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It’s depressing to see how Republicans are bungling the Obamacare issue. But it’s also understandable since it’s politically difficult to reduce handouts once people get hookedon the heroin of government dependency (a point I made even before Obamacare was enacted).

Unfortunately, I fear that the GOP might bungle the tax issue as well. I was interviewed the other day by Dana Loesch on this topic and highlighted several issues.

Here’s the full discussion.

What’s especially frustrating about this issue is that taxes should be reduced. A lot.

Brian Riedl of the Manhattan Institute debunks six tax myths. Here they are, followed by my two cents.

Myth #1: Long-term deficits are driven by tax cuts and falling revenues

Fact: They are driven entirely by rapid spending growth

Brian nails it. I made this same point earlier this year. Indeed, because the tax burden is projected to automatically increase over time, it is accurate to say that more than 100 percent of the long-run fiscal problem is caused by excessive spending (particularly poorly designed entitlement programs).

Myth #2: Democratic tax proposals would significantly reduce the deficit

Fact: Their most common proposals would raise little revenue

Once again, Brian is right. There are ways to significantly increase the tax burden in America, such as a value-added tax. But the class-warfare ideas that attract a lot of support on the left won’t raise much revenue because upper-income taxpayers have substantial control over the timing, level and composition of their income.

Myth #3: Taxing millionaires and corporations can balance the long-term budget

Fact: These taxes cannot cover Washington’s current commitments, much less new liberal wish lists

Since even the IRS has admitted that upper-income taxpayers finance a hugely disproportionate share of the federal government, it hardly seems fair to subject them to even more onerous penalties. Especially since the IRS data from the 1980ssuggest punitive rates could lead to less revenue rather than more.

Myth #4: The U.S. income tax is more regressive than other nations

Fact: It is the most progressive in the entire OECD

There are several ways to slice the data, so one can quibble with Brian’s assertion. But when comparing taxes paid by the rich compared to taxes paid by the poor, it is true that the United States relies more on upper-income taxpayers than any other developed nation. Not because we tax the rich more, but because we tax the poor less.

Myth #5: The U.S. tax code is becoming more regressive over time

Fact: It has become increasingly progressive over the past 35 years

Brian is right. Child credits, changes in the standard deduction and personal exemptions, and the EITC have combined in recent decades to take millions of households off the tax rolls. And since the U.S. thankfully does not have a value-added tax, lower-income people are largely protected from taxation.

Myth #6: Tax rates do not matter much to economic growth

Fact: They are among the most important factors

There are many factors that determine a nation’s economic success, including trade policyregulationmonetary policy, and rule of law, so a good tax code isn’t a guarantor of prosperity and a bad tax system doesn’t automatically mean malaise. But Brian is right that taxation has a significant impact on growth.

In the interview, I said that I had two fantasies. First, I want to junk the corrupt internal revenue code and replace it with a simple and fair flat tax.

Second, I’d ultimately like to shrink government so much that we could eliminate the income tax entirely.

Many people don’t realize that income taxes only began to plague the world about 100 years ago.

If we can somehow restore the kind of limited government envisioned by America’s Founders, the dream of no income tax could become a reality once again.

But if Republicans can’t even manage to cut taxes today, when they control both the executive and legislative branch, then neither one of my fantasies will ever become reality.

  • Thomas Galbraith

    These guys can not even get together over a beer let alone tax reform, and they just proved it over the AFA. Have been yacking about repeal and replace for how many years, then they do not even have a plan when the opportunity is right in front of them. They are pushing me closer to the independent side than anything, bunch of cry baby losers.

  • Richard Hennessy

    It doesn’t matter to me what Republicans do about tax reform; they failed at their most important task, repealing Obamacare. What they’re considering as tax reform is pretty much meaningless anyway. They propose to simplify it or just cut taxes, but it won’t be long before all the special interest provisions are restored, because the Republicans aren’t proposing real tax reform any more than they proposed real Obamacare (or should we now call it McCainCare) repeal.

  • Looks like the corrupt R establishment in DC is working with the corrupt DC establishment in DC to retain Federal control of the healthcare industry, in violation of the 10th Amendment and the Origination Clause.

  • It seems the R establishment never had intention of ending Federal meddling/control of the healthcare industry.

    The ACA cleared the House of Representatives as a bill for VETERANS titled “Service Members Home Ownership Tax Act of 2009” (H.R. 3590).

    It was a veteran’s home ownership bill, but Senate democrats gutted it and converted it into the ACA (H.R. 3590).

    The Supreme Court ruled that the ACA is a tax, and revenue bills are required to originate in the House of Representatives (Origination Clause)

    This argument has been officially labeled a technicality by D & R establishment leaders who wish to control healthcare in violation of the 10th Amendment.

    Currently 22 Ohio counties are currently projected to have no coverage options next year and another 28 counties may have no choices.

    These liars need to be removed from office.

  • Behold the D&R establishment oligarchy of DC.

    It appears they have no intention of supporting President Trump’s agendas or keeping their promise to the American people.

    Trump’s election has proven that the DC 2 party system is a hoax.

    DC functions as a corporation and routinely acts in interest of self, fellow globalists, and international banks.

    DC is under the exclusive jurisdiction of the US Congress, and is not a part of any state.

    Read: “None Dare Call it Conspiracy” – Gary Allen, 1971 – read online

    See: “AGENDA – Grinding America Down” – vimeo

  • 1913: Federal Reserve (private central bank)

    1913: Federal Income tax (top rate 7%)

    1913: 17th Amendment (deterioration of state rights)

    2013: ACA/Obamacare, (violation of Origination Clause, unlawful tax created in the US Senate)