Last week, more details on the Trump tax plan were released. The blueprint, which the “Big Six” tax reform panel is still amending, is excellent. Analysts have reported the plan will lower taxes for the average American by nearly $1,600, making it the most conservative tax plan since Ronald Reagan’s presidency.
Although the blueprint does laudably lower taxes for most individuals at all income brackets, some kinks still need to be worked out to ensure its passage. As Sen. Bob Corker, R-Tenn., has made clear in recent interviews, there is very little room for error here: If tax reform is to pass, only two Republicans can vote against the measure, and some Democrat backing would help for insurance purposes.
For the proposal to receive this degree of support, it will need to be tweaked to provide more tax relief to the middle class. In a new report, the Tax Policy Center found that as much as 30 percent of the middle class may pay more in taxes under the Trump plan. This week, everyone from Sens. Rand Paul, R-Ky., and Mike Lee, R-Utah, to reporters for the Huffington Post and Mother Jones have expressed concern regarding this issue.
A chief culprit is the elimination of the state and local deductions. In states with higher taxes, such as New York, New Jersey, and California, this move will have significant implications. For instance, more than 25 percent of Garden State residents are expected to pay more should this blueprint become law, while a family in Los Angeles earning $100,000 will have to fork over an additional $1,800 to Uncle Sam.
Tea Party Republicans and sympathetic Democrats will not vote for a plan that significantly raises taxes on the middle class, no matter how much that said plan lowers them holistically. After all, President Trump made an “explicit commitment” to ensure “tax reform will protect low-income and middle-income households.”
Last week, Paul proposed that if the reform team must remove the state and local deductions, the existing brackets could be moderately toyed around with to make up for the loss. Less bold resolutions, geared more directly towards the problem states and not involving altering the brackets, can also rectify this problem. In any event, solving it will allow the GOP to kill the one talking point that the liberal media is relying on to kill this bill.
Appeasing the populist sentiments of both the Left and Right is something that should be kept in mind not only for amending the current blueprint but also for thinking through further additions that may come in the weeks ahead. To increase revenue, many analysts expect more deductions to be removed, as well as for some “pay-fors” to potentially be added, before the tax plan’s official launch date.
For example, some fear that members of Congress are considering bringing former Rep. Dave Camp’s (R-Mich.) advertising tax plan back to life. Aside from impacting 20 million American jobs, this proposal would likely serve as protectionism for big businesses by squeezing startups and small businesses out of the marketplace. While large corporations could afford to wait several years to receive their advertising expensing back, many smaller firms — particularly those just starting out with little to no revenue — cannot. That could lead to the creation of state-created monopolies and artificial barriers imposed on income mobility. For this reason and more, 124 members of the House of Representatives have already come out against the ad tax in a bipartisan letter sent to House leadership. Republicans should refrain from enacting this revenue raiser or any others that would shift wealth away from the middle class.
These suggestions for improvement are not meant to question the Big Six’s chief goal for tax reform, which Speaker Paul Ryan, chief White House economic adviser Gary Cohn, and the president and vice president have said is to bring relief to the working class. Through implementing reforms like the scrapping of the marriage penalty and expanding the child tax credit, the tax reform panel has already made considerable strides in this regard. Now, all the Big Six needs to do is make its already good plan passable by fine-tuning the existing details.
Joey Bradfield is a campaign consultant and a former staffer for Sen. Rand Paul, R-Ky., and former Gov. Gary Johnson of New Mexico.
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