If we consider the repeal of Obamacare and the immigration issue as strikes one and two, is tax reform President Donald Trump’s potential third strike? More to the point, if his proposal doesn’t pass what is the future of a Trump administration that has total political dominance including the House, the Senate, and the Executive Branch, but can’t get his legislation through governmental channels?
Tax reform is a complicated issue. Let’s see if we can examine it in everyday language.
First, let’s make a prediction. Will Trump’s tax reform plan pass? Not a chance. Will some form of tax reform pass? Most likely. Why not Trump’s plan? That will take some explanation.
President Trump says that tax reform will help the middle class and his group of multi-millionaires will not benefit. It simply isn’t a true statement. The non-partisan Tax Policy Center reports that about 30 percent of the middle class will see a tax increase under the plan. In contrast, about 80 percent of the plan’s benefits would go to the wealthiest one percent in our country. Reductions in taxes related to the estate tax, partnerships and limited liability companies, and the alternative minimum tax proposed in the Trump tax reform plan will benefit President Trump and the upper one percent significantly, into the hundreds of millions of dollars.
Republicans often refer to the Democratic Party as, “tax and spend democrats” and criticize the national debt when a democrat is in the White House. According to the experts who study our economy, the proposed tax reform plan would most likely balloon the national debt by perhaps as much as $2.4 trillion over a decade. (In case you are trying to write that out, it is 11 zeros.)
President Trump says much of that predicted shortfall in taxes will be alleviated by the stimulus on the economy brought on by lower taxes. He says that reducing taxes by his formula will power charge our economy to above three percent growth, thus generating more tax income for the government to make up the loss in revenue. Fortunately, history can speak to us on this issue. Reducing taxes has been tried before as a stimulus to the economy without long-term success. In most cases, after a few years of the lowered taxes our national debt ballooned and we entered a recession that cost us more than the tax reductions created. That certainly was the result with the George W. Bush tax cuts of 2001 and 2002. By 2007 we were headed into the worst recession since the Great Depression of the 1930s. Who said, “Those who cannot remember the past are condemned to repeat it.“?
Considering all of the above let’s assume the tax plan will fail as it is currently written. Why did I earlier say that some form of tax reform will pass and become law? The answer, simply stated is, “politics.” One of the primary criticisms of the Republican Party is that it serves well as an “outside” group criticizing the “in” group but when it is given the reins of government it cannot transform itself into a governing party. The Republicans must find a way to be successful before they reach, “strike three.” They must pass something related to the tax reform plan. They have been unsuccessful in repealing Obamacare and, despite the continual rhetoric from the White House it is unlikely that the southern wall will ever be built. Thus, tax reform, the third plank on President Trump’s three key promises from the campaign trail must pass in some form or the Republicans may face major problems in the 2018 elections.
Can they do it? Of course, they have majorities in both houses of Congress. However, don’t expect it to even vaguely resemble the tax reform plan currently being talked about from the White House. That one will be, “dead on arrival,” in Congress.
— Dr. Mark L. Hopkins writes for More Content Now and the Anderson Independent-Mail in South Carolina. He is past president of colleges and universities in four states. Books by Hopkins currently available on Amazon.com and Barnes & Noble include “Journey to Gettysburg” and “The Wounds of War,” both Civil War-era novels, and “The World As It Was When Jesus Came.” Contact him at firstname.lastname@example.org.