1. Overall this is a very good tax plan, one of the best proposed in a very long time. It prioritizes American citizens ahead of the federal government. People of all political positions for a long time have been talking about the importance of simplifying the tax code. We all agree it is overly complex, but it takes courage to actually try to simplify it.
2. The plan will receive a lot of pushback from special interest groups because it eliminates almost all itemized deductions. It won’t be good for accountants either, because they’ll have less work to do.
3. However, contrary to what some are saying, it will benefit predominantly lower-income and middle-class people who don’t have a lot of time and a lot of money for accountants to work on itemizing their deductions. The current system benefits predominantly higher income people (definitely the 1%) who have a lot of time and money to work the system and to get a lot of deductions.
4. The Trump administration has already shown an openness to raising the top tax rate on the highest income earning, essentially stripping the argument that this plan benefits the wealthy. It will be revealing to see who still is making that case if we modify the highest tax rate and make it higher. I’m hopeful that at least Democrats such as Joe Manchin from West Virginia, Heidi Heitkamp from North Dakota, Joe Donnell from Indiana, and many others will support it. They need to understand that they represent the people of their states, not Chuck Schumer from New York. At the same time, Republicans such as Rand Paul need to understand this is not the time to vote against any bill that doesn’t do exactly what you want it to.
5. The tax plan understands that raising children is an “investment.” Our country (sometimes) seems to understand that businesses make investments. It’s important to also realize that children are an investment in the future of our country. Parents who spend a ton of time raising children are not just benefiting themselves; they’re benefiting our country.
6. My biggest concern is the impact on the national deficit. Some estimates show the tax cuts being worth about $5.8 trillion over 10 years, being offset by $3.6 in other ways over 10 years. It is true that the federal deficit is a big concern in the country. However, the biggest concern is the U.S. economy, not the budget of the federal government.
If we grow our economy and keep the federal government small enough, it won’t be able to hurt the U.S. economy too much. So it’s perfectly fine if we cut taxes and allow citizens to have more money if it comes at the cost of the federal budget.
We have had very slow growth over the past several years – so slow, in fact, that many made fun of the administration’s stated goal of wanting to have a 3% annual GDP growth in the future. None of this is to say that the federal deficit is not a concern. There’s no doubt that we need to cut the deficit. However, the best way to do that is to cut spending. Medicare and Social Security are strangling us financially and threaten to hurt the very people they’re supposed to help. At the end of the day, we need to ask ourselves: is that $5.8 trillion better in the hands of the American people, or in the hands of a federal bureaucracy in Washington, D.C.? As Ronald Reagan once said: “The problem is not that people are taxed too little; the problem is that government spends too much.”
7. Perhaps most importantly, this plan will help businesses provide more jobs and pay employees more. Cutting the corporate tax rate will predominantly benefit smaller firms who can’t pay lawyers and attorneys as much to find as many loopholes. Businesses will have more confidence to invest in their companies, and they will realize as they grow that they need to compete better to find more employees. This will result in higher wages. To be sure, Congress will need to work as well to eliminate many duplicating entitlement programs and reduce fraud and waste in their entitlement programs. Companies will find it harder to hire more employees – even if they have a lower tax rate – if they are forced to operate in a welfare state. That’s a separate conversation, but it’s an important one to have as we seek to grow our economy and improve our quality of life. The sooner we can pass this tax plan, the sooner we can hopefully move forward on reducing the size of the federal government and scale back our welfare state.