It is impossible to explain economic policy in soundbites. Many voters hear support or opposition to tax reform based on which party is proposing it. The last big tax reform occurred in 1986 and was bipartisan. Both parties negotiated the terms. Open hearings were held and both parties made concessions.
The current disagreements are based on classical versus Keynesian approaches. Classical economics asserted that the economy was self-correcting and there was no need for government intervention. The Keynesian idea suggested the economy was like an elevator that followed the business cycle up and down, but could get stuck in the basement at low levels of employment, income and output. During the Great Depression the government used tax cuts and infrastructure spending to create jobs. World War II spending jolted the economy into a growth pattern.
Tying Obamacare to tax reform by ending the individual mandate threatens the existing health care system. Taking $320 billion from Medicare and Medicaid to provide tax cuts primarily for the rich and well connected will not create new jobs when unemployment is at 4.1 percent. This approach would ultimately result in 13 million Americans without insurance over the next 10 years. The Congressional Budget Office has stated that this will raise insurance premiums by 10 percent per year for the next 10 years. So, the government robs Peter (the little guy) to pay Paul (big campaign donors).
The Tax Reform Plan will increase the national debt by $1.5 trillion and $1 trillion will go to corporate tax cuts, $300 billion to wealthy individual taxpayers and $200 billion to the middle class.
As for tax burdens, American taxes as a percentage of the gross national product is lower than 34 other countries. The corporate tax rate is currently 35 percent. However, loopholes reduce the rate to about 14 percent. Loopholes, such as carried interest, offshore tax havens, shifting intellectual property such as patents, copyrights, and trademarks to overseas subsidiaries, are not being addressed.
The trickle-down idea has not increased purchasing power for the middle class for 40 years. The divide between the top 10 percent and the bottom 90 percent keeps increasing. The trickle down did not have much trickle. Instead, the middle class’ share of the economic pie is constantly shrinking.
When politicians act in the dead of night with the speed of light, ask yourself why they took all those days off during the legislative session. Remember, late-night amendments usually benefit special interests.