As expected, President Donald Trump used a speech in Springfield, Mo., Wednesday to kick off his campaign for tax reform. He offered no details, only stilted rhetoric about “pro-growth and pro-American” reforms that would “bring back Main Street.” ADVERTISING As
As expected, President Donald Trump used a speech in Springfield, Mo., Wednesday to kick off his campaign for tax reform. He offered no details, only stilted rhetoric about “pro-growth and pro-American” reforms that would “bring back Main Street.”
The U.S. tax code badly needs reform. But White House and congressional Republican negotiators since last spring have been unable to agree on how to do it. Conservative advocacy groups, such as the Koch brothers’ Americans for Prosperity, disingenuously talk about “unrigging the tax system,” but what they really mean is to rig it further for people like them.
White House negotiators have punted the issue to congressional budget committees. Deadlines have slipped, from August until possibly in 2018. In February, Trump expressed surprise that health care was complicated. Compared with tax reform, health care is a day at the beach.
The last time the tax code was reformed was in 1986, and it took four years and endless compromises between President Ronald Reagan and Congress to do it. Compromise has become a lost art in the past 31 years.
This year, with the GOP in control of the White House and both houses of Congress, tax reform was a top priority for the Republican donor class. It has been imperiled by disagreements among GOP leaders and Trump’s inter-party feuds.
There’s general agreement on the goal of boosting economic growth near 3 percent, but vast differences remain about going for the big enchilada of tax reform or settling for minor tax cuts. There are disputes about how many jobs they’d create and whom they’d benefit. And that’s even before you invite Democrats to weigh in.
Trump talks a lot about “middle class tax cuts,” but most of the GOP’s proposals would tilt benefits heavily toward wealthier Americans. The Trump campaign tax plan — the only one that was remotely fleshed out — would give Americans earning $48,400 to $83,300 an average annual cut of $1,010. The top 5 percent of earners would get a break of $18,000 a year. The top 1 percent of earners would get 47 percent of all the tax savings, averaging around $214,000.
House Speaker Paul Ryan, R-Wis., has long touted reforms that give the richest 1 percent 77 percent of the breaks. Republicans aren’t eager to defend that in an election year.
Trump is pretending this largess will trickle down in the form of good middle-class American jobs — a Trumpian version of what then-presidential candidate George H.W. Bush in 1980 called “voodoo economics.” The idea is big corporations and super-wealthy Americans will invest their tax savings in Main Street businesses, as they did 50 years ago, not on stock buybacks, exotic financial instruments and huge executive compensation packages.
The devil will be in the details, and the details will not be pretty.
— St. Louis Post-Dispatch
