Tax bill would hurt middle class

Tax bill would hurt middle class”

As tax reform legislation moves through Congress, the swamp is in a frenzy. Instead, revenues rose as the economy boomed for the rest of the 1960s, until Nixon's tax increases and monetary policy chaos (cutting the dollar's tie to gold) cut the boom short. Yet, there is room for improvement in the current legislation being considered.

One of the economists authoring the letter, Douglas Holtz-Eakin of the American Enterprise Institute, says tax reform can lead to higher capital, which leads to higher productivity, which leads to higher wages and benefits for workers. Fortunately, such a path has already been blazed.

AEI resident fellow Alex Brill "studies the impact of tax policy on the U.S. economy as well as the fiscal, economic, and political consequences of tax, budget, health care, retirement security, and trade policies". This is a worthy objective. America will benefit from the resulting soaring growth and end of long-term stagnation, which the country has been stuck in for a decade. As now written, the tax cuts would increase deficits by about $1.5 trillion over a decade.

Photo by Contributed Photo /Times Free Press.

Yes, significant spending cuts will be required to stabilize the nation's balance sheet.

Even if tax cuts provide a brief economic boost in the short term, high and rising national debt will eventually slow growth.

Debt increases the risk of another financial crisis, because when investors lose confidence in the government's ability to pay back borrowed funds, interest rates can spike. "No CEO sits there and says, 'When my tax rate goes down, I'm going to hire more people and pay them more'". The loss of the deduction is actually a tax increase on the rich, who utilize it far more heavily than others. "With or without tax reform, economic growth will be affected by numerous unrelated factors that are hard to predict". "I don't think there's a top tax expert in the country who thinks this is really good tax reform", said economist Laurence Kotlikoff of Boston University, whose research showing a potential $3,500 annual jump in wages for the average working household has been cited by the White House in support of the planned cuts. Easier to understand? Well, from listening to Senate Republicans attempting to discuss their "tax reform bill", it is even LESS understandable than the present abomination.

There is also a serious moral obligation at stake. Conversely, foreign producers who sell goods and services in the US would be required to pay taxes on their USA sales as the price of accessing America's lucrative consumer market.

We need a tax reform plan that truly addresses tax fairness and takes into account all taxes that individuals and businesses pay, including payroll taxes, income taxes and taxes on investment income. We simply have to look at the past for guidance.

Bringing our debt under control will require reforming and slowing the growth of health and retirement entitlements. The House bill budgets the savings of providing this small tax credit at around $210 million a year. Pro-growth tax reform that allows for a larger and more robust economy means our debt relative to our output shrinks and makes the necessary spending reforms easier. The United States is one of the least competitive countries in the world when it comes to the taxes we levy on our own businesses.

Congress has an opportunity to write a new chapter of America's economic story. That is the best way to create a happy ending for current and future taxpayers.

As tax reform becomes a major focus in Washington, Congress faces a unique opportunity to fix a situation that has long favored multinational corporations at the expense of USA companies.

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