Michael Barone is a voice of sanity in this case. It looks like he has been reading the forum.
http://www.washingtonexaminer.com/michael-barone-hurtling-gop-tax-bills-are-actually-serious/article/2642056Michael Barone: 'Hurtling' GOP tax bills are actually serious
by Michael Barone | Nov 30, 2017
The Republican tax bills are something more serious and responsible than "hurtling" missiles "tilting" the tax code toward the "wealthy." (AP Photo/J. Scott Applewhite)
“The Republican tax bill hurtling through Congress is increasingly tilting the United States tax code to benefit wealthy Americans.” That’s the beginning of the 37-word first sentence in the New York Times’s stage-setting front page story on the tax bill under consideration in the Senate this week.
It’s a nice illustration of creatively phrased advocacy journalism. “Hurtling” suggests irrational, uncontrolled, threatening movement; “tilting” suggests abandoning upstanding fairness; spelling out “the United States tax code” suggests an ominous attack on a respected national institution. And all this
“to benefit wealthy Americans.”This is less reportage than advocacy journalism, written to advance the argument, with which many people agree, that Republican tax bills are harmful because they make federal taxation less progressive. But
it’s also an argument against any tax cut at any time. After all, if you start off with a progressive system that imposes higher rates on high earners and doesn’t tax low earners at all — as the current federal income tax does -- then every tax cut takes that shape.
Missing from the arguments of Republicans’ critics is acknowledgement that we already have what is, by most measures, the most progressive national tax system in the world. Other advanced countries tend to rely more heavily on regressive sales (value-added) taxes and many have less steeply graduated income taxes.
Currently, the top one percent of U.S. earners pays about 40 percent of federal income tax revenue; the next 9 percent about 30 percent more. You could make the system even more progressive with more progressive income tax rates or by raising the amount of income subject to the payroll tax, but
only at the risk of redirecting high earners’ attention from productivity to tax avoidance. Such changes tend to reduce economic growth, just as tax cuts tend to increase it.In fact, this year, Republican tax writers have devoted much less attention to cutting income tax rates for high earners than their predecessors did in 1981 or 2003 or their presidential nominees in 2008 or 2012. Instead, they increase the child tax credit and double the standard deduction. That reduces taxes for many modest earners and gets the government—and Congress—out of the business of encouraging some behaviors and therefore discouraging others. This could reduce the scope for lobbyists to lard up the tax code with special exemptions and favors.
The Republican bills attack two of the three largest “tax expenditures,” by limiting or eliminating the deductions for home mortgage interest and state and local taxes. The dollar benefits of those deductions are hugely concentrated on “wealthy Americans,” especially in high-tax, high-housing-cost states where people vote heavily Democratic. These progressive changes could only be made by Republicans, who have few House members and zero senators from such constituencies.
Sophisticated critics of the Republicans’ bills, like former Treasury Secretary Lawrence Summers, avoid arguing against any tax cut ever, but instead say that, with low unemployment and increasing growth, this is the wrong time. Economic policy should depend on the economic not the political calendar.
The problem with this argument is that the biggest cuts in the Republican bills are to the corporate income tax—from 35 to 20 percent. Today’s corporate rate is the highest of any advanced nation. It encourages multinational firms to park billions of dollars abroad rather than invest them here, or to be merged into a foreign-based rival.
Moreover, economists of just about every stripe agree that the economic burden of the corporate tax falls not just on stockholders, but also and perhaps largely on employees and consumers. The only disagreement is on who bears how much.
So there’s a widespread consensus for a corporate rate cut. Former President Barack Obama proposed one in February 2012, but never got around to negotiating seriously with congressional Republicans. Republicans today are only acting responsibly, at the political risk of demagogic charges that rate cuts for corporations and unincorporated businesses paying as individuals are aiding “wealthy Americans.”
Some critics focus on provisions fashioned to take advantage of budget procedures and Congressional Budget Office scoring rules mostly set in the 1970s. Both parties are guilty of gaming this increasingly dysfunctional system, especially CBO’s wildly oscillating cost estimates of the Obamacare mandate.
...the Republican tax bills are something more serious and responsible than “hurtling” missiles “tilting” the tax code toward the “wealthy.”
