Economy & Budget

Trump’s tax plan is a bold step toward draining the swamp

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Wednesday, the Trump administration delivered a two-fer: On the one hand, it took its boldest step yet in its quest to drain the swamp that is Washington, D.C., while on the other hand it played its strongest card in its effort to jump-start the kind of economic boom that would extend the benefits of the anemic Obama “recovery” beyond the bicoastal elites by fueling the kind of economic growth the nation has not seen since the Reagan years. 

Revealing details of a tax code-based attack on the Creatures of the Washington Lagoon, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn released the administration’s proposal for a comprehensive reform of the nation’s tax code, what it calls the largest business and middle income tax cut in the nation’s history. If President Trump can sign it, or anything like it, into law, he will have taken great strides in draining the Washington swamp and moving political power out of Washington, DC even as he generates massive job growth. 

{mosads}Trump’s proposed reforms would vastly simplify the system by wiping out all but the charitable contribution and mortgage interest deductions in exchange for dramatic lowering of personal and corporate income tax rates. This would represent a massive tax cut that would likely spur a huge boost in economic growth and job creation, while simultaneously leaving more money in taxpayers’ wallets.


On the individual side, the code would shrink the number of different tax brackets from seven to three – set at 10 percent, 25 percent, and 35 percent. The reform would repeal ObamaCare’s 3.8 percent tax on investment income, and would repeal the Alternative Minimum Tax and the Estate Tax (AKA the Death Tax). The reform would eliminate itemized deductions other than the charitable contribution and mortgage interest deductions, and would double the standard deduction. 

On the corporate side, the reform would more than halve the tax rate, dropping it from 35 percent to 15 percent. Small business owners – many of whom file their business taxes through their personal returns – would be eligible for this 15 percent rate. The reforms would eliminate special interest loopholes, and would include a one-time repatriation tax designed to bring back to America an estimated $2 trillion in profits currently held overseas. 

Removing all the special interest loopholes and deductions other than the charitable contribution and mortgage interest deductions would greatly simplify the system. That would drastically cut down on the six billion hours Americans spend preparing their returns every year, and save much of the $400 billion they spend to ensure they’re complying with the complicated code.

As important as it is to save that time and money, there’s another benefit to simplifying the system: It allows economic decision-making to be made on the basis of economic factors, rather than political. In survey research Tea Party Patriots conducted two years ago, as we were preparing our Yellow Card agenda, a majority of survey respondents said they believed the tax code should not be used to influence behavior, but should be used simply to raise enough money to fund the appropriate level of government activity, with as little distortion to the free market as possible.

In addition, simplifying the tax code would reduce the power and influence – and, in some cases, threaten the jobs – of the thousands of K Street lobbyists who make their living by inserting a comma here and removing a semi-colon there in the code. Removing loopholes from the tax code is the virtual equivalent of pulling the plug out of the bottom of the bathtub – stand back, and watch it drain.

Draining the swamp is important – it’s one of the things that sets off Trump from his predecessors – but it might not be as important as kicking the economy into high gear and generating the kind of job and wage growth that would spread the benefits of the Obama “recovery” to the forgotten men and women of the American heartland.

These tens of millions of Americans have been waiting patiently for a president who understands and cares about their plight. They found him in Donald Trump, and their votes fueled his stunning victory over the candidate the bicoastal elites thought had it nailed down.

Doubling the standard deduction would immediately leave more money in their pockets, even as the lower business taxes will encourage job and wage growth. For the first time in decades, their relative standard of living might improve.

This is what President Trump promised on the campaign trail, and this is what Trump voters voted for. It’s no wonder, then, that when Tea Party Patriots polled its members and supporters last night, more than 88 percent told us they support this plan. Congressional Republicans – and Democrats – would be wise to get on board this train before it leaves the station.

Jenny Beth Martin (@JennyBethM) is co-founder of the Tea Party Patriots.

The views expressed by contributors are their own and are not the views of The Hill.

Tags Congress Donald Trump economy Jenny Beth Martin taxes

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