Oh America, you’ve just taken the big plunge. We’ve re-written the tax code without a single hearing, without expert testimony, without any review. We’ve adopted the Kansas tax plan, pushing forward ideas like the Laffer Curve and Dynamic scoring from the Double-A minor ball into the big leagues.
But, before the tax plan comes into action, you’re going to see a lot of Republican celebration about how awesome this tax scheme is going to be.
Before you enter into that discussion, there are a few points I’d like to make about how we even discuss the Trump Tax Scheme.
Let’s be clear about something. A plan implies as though we have a good understanding of the overall outcome and we have a plan on how to deal with it. The Republican Tax Scheme is NOT a plan. At best, it is a tax scam and the results are pretty well known:
In 2012, Kansas lawmakers, led by Gov. Sam Brownback, a Republican, enacted a tax cut that eliminated state income taxes entirely for pass-through entities — such as sole proprietorships and limited liability partnerships — which are taxed at the owner’s individual income tax rate. The law also lowered individual income tax rates, cutting the top rate to 4.9 percent from 6.4 percent.
The tax package reduced state revenue by nearly $700 million a year, a drop of about 8 percent, from 2013 through 2016, according to the Kansas Legislative Research Department, forcing officials to shorten school calendars, delay highway repairs and reduce aid to the poor. Research suggests the package did not stimulate the economy, certainly not enough to pay for the tax cut. This year, legislators passed a bill to largely rescind the law, saying it had not worked as intended.
A cut implies that people see a reduction of taxes. This is also not, in fact, a cut for many. This is a tax EXEMPTION for those who the most wealthy, who will now be paying ZERO. Zero is not a tax cut. Zero is tax exemption.
The tax scheme isn’t the conclusion. It’s part one.
If you think the tax scheme is really the conclusion, everything the Republicans want, I ask you again to look at Kansas and Louisiana. Here is what will happen next. With a $1.5 Trillion dollar deficit created, the solution is to start cutting services to make up the difference. In Kansas, education suffered:
“Nearly one-quarter of all Kansas public school students (and higher numbers of harder-to-educate students) are currently failing to meet the state’s standards and are being denied a constitutional education,” Rupe said in a statement.
Governor Sam Brownback decried the ruling.
“Today’s court decision is yet another regrettable chapter in the never ending cycle of litigation over Kansas school funding,” he said in a statement. “The court should not substitute its decision for that of the legislature.”
Finding more money for schools may be difficult in Kansas given the legislature hiked income tax rates over Brownback’s veto in June to address big budget gaps.
Services have to be cut in order to make up the difference.
The tax scheme can never fail. You just have to wait for the ship to come in.
Facing budget implosion, Kansas Republicans bailed on Gov. Sam Brownback’s tax plan, moving to set the state back up on economic footing that could be survivable. You’d think that would be the end of the story, right? Nope. For some of the strongest supporters, the question isn’t “why didn’t this work” the question is: “why didn’t you give this more time to work.” In the years of the Trump administration ahead, this is going to be a signature talking point: “Just give it time”.
While the argument continues to get made, you’re going to see a lot of blame for why it isn’t working — and that blame will be set right at you, you liberal person you. You aren’t spending enough. You aren’t enough of a consumer. You use too much in government services. You favor others who use government services, or in the mind of Kris Kobach, there may be millions upon millions of refugees and brown persons who are getting an ‘unfair share’.
Waiting for his ship to come in…
Here’s the truth
The ship never comes in. The government will just go further in debt, and the US will sell more and more of our bond, mortgage, and consumer debt to foreign entities.
The government will immediately need to move to cut services, often those that help the poor first. While it is true the Government could cut other items — military contracts, etc. wake me up when those things happen.
There is no trickle down. Companies will get billions of dollars in tax breaks; great. Pass through entities will be easy. And, their interest in raising wages? Almost none. Shareholders and others may benefit, but workers? Not so much. In fact, under this scheme, like the Kansas scheme, businesses will be rewarded for more automation, and the businesses that benefit most are already automating a lot of their process. So, tough news for the little guy.
This isn’t a tax “plan” it’s a tax scheme. This isn’t a tax “cut” it’s an exemption and a giveaway.
And, unlike Kansas, which figured in roughly $2B in “Dynamic Scoring” (and missed by about $1.9B) , we’re going to try and dynamic score more than a trillion.
Any idea how this turns out before we stop looking for the ship to come in?