A ruse dubbed “Tax Reform” is afoot in the U.S. Congress. Here’s the plan:
There will be tax cuts across the board, with the top corporate tax rate going from 35 percent to 20 percent. That, despite the fact more than half of corporations pay no income tax at all, thanks to a tangled forest of tax loopholes and an army of tax specialists.
The rates for other income levels would fall from 15 percent to 12 percent and from 28 percent to 25 percent respectively.
We are told if corporations get a tax boon, they will share their new largesse with others in new jobs, higher wages and better benefits – the old “Trickle Down” theory of economics, which has long been discredited. In fact, it tends to “gush up,” not “trickle down.”
The massive cuts will cause at least a $1.5-trillion loss of revenue during a 10-year period in the form of deficits and will add even more to the national debt ($7 trillion more to the current $20 trillion debt, according to the Tax Policy Center). To make up for those staggering losses, the plan’s Pollyanna optimism assumes a huge increase in economic activity that will fill the tax coffers. Like circling buzzards, its planners are also aiming to slash tax deductions so important to lesser-income folks, such as tax breaks for retirement savings and elimination of deductions for state and local taxes. There are many others proposed in this shell game, and none of them is pretty.
To be sure, tax reform is overdue. We need some readjustments, including at some of the upper-income levels. But true reform must include all-around fairness combined with elimination of loopholes constantly cooked up by special-interest tax attorneys and legislators.
Most of all, it’s the middle class and small businesses that truly need a tax break – not the gargantuan corporate honchos – millionaires and billionaires. That is what was promised, and the promise should be restored. Standards of living, by and large, have declined steadily for nearly four decades for millions of people, making the American Dream a receding mirage for so many families.
Tax cuts for the middle class and poor are what’s needed because those people and smaller companies would be able to buy more goods and services, increasing demand and thus spurring job activity – and tax revenue – in just about every sector.
According to the Bureau of Labor Statistics, since the last recession smaller businesses (20-499 employees) created an astounding 67 percent of net new jobs. True tax reform ought to be a no-brainer: give smaller businesses a substantial tax break and spur the forces that would give middle-class and lower-wage Americans a boost.
Nothing at this point is set in stone. Perhaps legislators will come to their senses and jigger into being a reform plan that genuinely benefits one and all, especially the middle class and the working poor.
One thing’s for sure: Now is not the time to use “Tax Reform” as an excuse to toss sops to most Americans while aggrandizing the already super-rich. It’s time to initiate true reform by changing the tax system to make it as fair as possible and to stimulate the economy from the bottom up, not the top down.
Author: Dennis Dalman
Dalman was born and raised in South St. Cloud, graduated from St. Cloud Tech High School, then graduated from St. Cloud State University with a degree in English (emphasis on American and British literature) and mass communications (emphasis on print journalism). He studied in London, England for a year (1980-81) where he concentrated on British literature, political science, the history of Great Britain and wrote a book-length study of the British writer V.S. Naipaul. Dalman has been a reporter and weekly columnist for more than 30 years and worked for 16 of those years for the Alexandria Echo Press.