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First Impression: House GOP Tax Plan

Hipsters on social media have coined the new word “meah” meaning uninteresting, and that’s pretty much what our first impression of the House Republicans’ much ballyhooed tax “reform” package was.

Don’t get us wrong – there’s a lot to like in the proposed legislation, and there are some opportunities to make it better – but our lack of enthusiasm is driven by one major defect that no amount of spinning and selling will House Tax Plancure.

Because it is being moved under so-called reconcilliation, it assumes that all tax cuts and rate reductions must be “paid for” by raising revenue somewhere else, so the overall taxation, and more importantly the overall spending burden, is not reduced.

The cost of government is not what it taxes, it is what it spends.  We need to scrutinize every penny the federal government is spending – including money spent at the Pentagon – to make sure it is justified by both need and the Constitution.

So far as we can tell there’s no plan to do that.

Former Comptroller of the Currency David Walker once estimated it would take 75 years of double digit economic growth in order for us to close our fiscal gap – and that was before the national debt grew to $19 trillion under President Obama.

And this tax legislation, while it includes some pro-growth elements it is nowhere near the tonic needed to get the American economy growing by double digits.

One element that will help – and pro-growth advocates must fight tooth and nail to make sure it survives without being watered down – is the special tax rate for repatriating overseas earnings.

The new tax reform plan from House Republicans aims to permanently lower the corporate tax rate to 20 percent, and calls for a one-time tax rate of 12 percent on cash returns and 5 percent on non-cash for corporate money repatriated from overseas.

Estimates of the amount of cash kept out of the United States by our current tax rates vary, but the most common number used is $2 trillion.

$2 trillion is a staggering sum in relationship to the main economic drivers of the American economy – small business – and in terms of big business it is also huge – it is almost the market value of Apple, Microsoft and Google combined.

In terms of capitalizing America’s largest employers, $2 trillion would capitalize Walmart (1.3 million jobs), Home Depot (340,000 jobs) General Electric (305,000 jobs), Kroger (443,000 jobs), IBM (380,300 jobs) more than twice over.

Getting that money repatriated and invested in the US economy could be YUUUGE – to use one of President Trump’s favorite descriptors – in terms of creating new jobs.

The funds parked offshore have been thought to be relatively constant over the past few years, but that number pales in comparison to the impact of the amount of money that the government has been withdrawing from the economy and shipping overseas – primarily to China – in the form of debt service every year.

This year, the federal government will pay $266 billion in interest charges. That is more than the present market capitalization of Walmart – which employs 1.3 million Americans – EVERY YEAR.

We think the point at which spending must be reined-in was reached and passed a long time ago.  

Much as they will try, Republicans in Congress cannot blame this state of affairs entirely on Obama and the Democrats – they have promised to be the Party of fiscal responsibility, but whenever they are put to the test on spending they buckle and keep right on spending.

And make no mistake, at some point Congress has to balance the budget and the only ways to do so are to cut spending and grow the economy. Raising taxes is not really an option because such a tax burden would wreak havoc on the American economy and our country's quality of life for generations to come.

The GOP tax plan is a start, but not a particularly bold or ambitious start, and it is only one part of a pro-growth economic formula.

Slowing the rate of the increase in spending isn’t even an issue anymore. Politically motivated spending – literally the attempt to buy our votes with our own tax dollars – is what is really killing economic growth, and it must be stopped.

Tax cuts are great, but choosing to spend at this level – and it is a choice by Democrats and Republicans alike – amounts to a betrayal of our country and it is time we call it what it is; a treasonous level of spending, deficit and debt that will continue to be the greatest drag on economic growth.

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Tax Plan BBA etc

If you really want a balanced budget, then please support the Convention of States!

We can make it happen! https://www.conventionofstates.com

Tax cut paying for itself

Tax cut is helping to pay for itself. Eliminating star and local.Tax deduction will produce 1.3.trillion. Capping the mid at $500,000 Wil produce a lot ( I don't have a figure)
Seek Simonson
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Comment proves our point

This comment makes our point for us - it's not a tax "cut" if it remains revenue neutral and merely shifts government tax incentives from left pocket to right pocket. There's a lot to like in the bill, but we continue to believe the path to real long term economic growth is reducing the total tax AND spending burden on the US economy.