Tax Reform: Get it Done (And this time get it Right)
An outrage over taxes founded this county. And for its first 123 years, the US of A managed handsomely with zero income tax.
Abraham Lincoln interrupted that in 1862 to finance the Union Army. Buts its success was short lived when an 1872 Supreme Court decision repealed federal income tax as unconstitutional.
We made it all of the way to 1913 before it miraculously clawed its way out of the grave (see movie “The Revenant”) where federal income tax became law. Congress ratified the constitution to pull it off. From then on nothing changed until Ronald Reagan’s monumental 1986 Tax Reform Act.
But as cleverly crafted as the ’86 makeover was, it opened up a monstrous black hole, sucking hundreds of thousands of jobs into its void – too many companies could no longer stomach the highest corporate tax rate on the planet, they packed up and left. The most massive business exodus in the history of this county put America’s job creation machine on life support.
That it went on for 30 years and we survived is truly a wonder, yet here we are in 2017 with a stock market humming along as if we’ve a lock on long overdue tax reform. But hold up a sec. Look at the hand we’ve got:
The Party of NO (DEMS)
The Party of CAN’T (GOP)
A POTUS Who’s His Own Worst Enemy
And a Dust-up Brewing Over SALT
Washington at its worst.
And so NOT the hand Reagan was holding in 1986 when the GOP had a lock on all three branches of government as Republicans do now. Sorry, but was when majority control actually meant something. When voters who put them in office had belief Congress would actually come through on campaign promises.
And now: this self-inflicted tsunami of acrimony to overcome, and, more daunting, deciding at when level tax cuts might be meaningful.
Middle class or corporate?
There’s a plausible path to both?
Really? Show me.
It’s likely either-or, and then, oh my gosh, special interests. Reagan said the only special interests in this country should be the American people, but it’s never been that way and never will as long as special interest money fiances politicians into office. Seriously, how more stacked against the odds can tax reform be?
So the conundrum: gifting the peeps who hand out jobs vs gifting the peeps who get jobs.
Gifting the middle class makes paychecks bigger, Groovy. But an empty victory since middle classers, well, except for employing housekeepers, they don’t hire. Corporations do.
Middle classers don’t give themselves raises, either. Corporation do.
Middle cassers don’t provide themselves healthcare bennies. Corporations do.
Middle classers don’t give themselves time off for family emergencies, extended vacays, telecommuting permissions and all manner of “special” situations that intercept and arrest the normal. Corporations do.
INSTEAD: say corporate is gifted to level the playing the field with other countries we lost jobs to so companies will come back to the U.S. bring jobs with them. Wouldn’t that be nice?j Yes, unless you factor in a massive outcry against the rich get richer. What middle classers never get is, you shoot the rich, you hit the poor. It’s no how big one’s paycheck is, as it is that…
One Even Gets
Anything we can make of this for real estate?
Maybe this: the mother’s milk to a thriving market is reasonable policy protecting middle class homeowners, who already pay 83% of all federal income taxes, from a loss in home value. Pray that is where the focus is, because some talk on reforms could result in a 10+% loss in home values, similar to the beating commercial values took in the ’86 Tax Reform Act.
It’s all good to lighten the load on businesses so they start hiring again. But at the expense of middle class homeowners? Not good. Home-owning families with incomes from $50,000 to $200,00 could face tax hikes averaging $815 in the year after enactment, another Obamacare-like backfire hammering the middle class.
Now, before you pole vault to the Kansas tax cut experiment as a disaster, listen here, now and good: perhaps you think a 100% wiping out of business tax is a good idea. Perhaps you are an idiot. Kansas is an idiot. Went too far. Didn’t think it through. Didn’t learn. There’s no way zeroing out business tax can support a sustainable tax structure.
Note to Congress: no using Kansas’ idiocy as an excuse for not getting reform that moves the ball. Fumble this one and we will come after you.
Note to American hopefuls: don’t pop the cork just yet; we’ve a long hill to climb and now more than ever, the deck is stacked. Curb thy exuberance, people, it’s stacked against us.
Not to leave it dangling: SALT is State and Local Taxes, a tax deduction favoring who, five states, maybe? How many or which ones shouldn’t matter; it’s an idiotic subsidy that should long ago have been squashed. Idiotic because once rates are lowered, said deduction becomes a whole lot less of a deduction. Which places that whole issue in the realm of: “What!? We just swallowed an elephant, now we’re choking on a peanut?”
Enough of majoring in minor issues, people!