Opinion | Finance

Let's be honest — this isn't actually tax reform

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

The White House has been touting massive tax cuts; the largest tax cut in America's history. Given the way previous administration have promoted their own fiscal efforts, we're used to being let down.

However, this time it was going to be different, as promised by White House chief economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin. Republicans control both ends of Pennsylvania Avenue, after all. Since Republicans have gotten their hands into the process, we know where the promises will all go to die: Congress.


We started with the reform of the tax code; four tax rates instead of seven. A simpler and fairer tax code. On the corporate side, a rate cut from 35 to 20 percent. Small business went from 39.6 percent to 25 percent; seems almost simple. But then, "the swamp" rose up and members of the House and Senate get in the way with their special interests and issues.


The Senate version of tax reform brought real clarity to this conversation about overhauling the tax system. What is now discussed doesn't come close to being real tax reform for the American people. What it does qualify as is a grab bag of goodies for the uber-wealthy globalists while passing the price tag on to the middle and upper middle classes in America.

We've gone from tax reform to tax deform. 

For example, the real estate depreciation lives part of the Senate bill, which given everything else, no one would blame you for missing it. But it's a major gift to billionaire real estate owners. The plan proposes moving the time frame from 39 years to 25 years on depreciation. The Tax Foundation scored that as costing Treasury hundreds of billions in revenue between now and 2036. Who benefits from this? Literally a handful of real estate billionaires. 

If you're wondering why the Senate bill pushed the corporate tax cut back a year, or the small business tax went up to 30 percent from the 25 percent proposed in the original House bill, well, I'll tell you: When you're giving such a massive break to a small handful of people, you have to screw others, like small businesses, corporations and by extension the shareholders. This will also result in 401(k) plans losing value by pushing the corporate tax cut.

Then there is the carried interest loophole that somehow managed to be avoided in either the House or the Senate plan. Remember that issue? The one that Donald Trump ran on? Recall that a certain class of money managers and investors avoid the 39.6 percent tax bracket and instead pay at the 20 percent tax bracket by claiming their compensation is capital gains and not income.

You can look all you want at the House and Senate versions of tax reform, but you won't find the loophole closed. It's still a gaping hole for the favored class with friends in high places, Gary Cohn and Steven Mnuchin, who were instrumental in framing the bill.

Both of these men are Goldman Sachs alumni. Why wouldn't they want to help their chums back on Wall Street? Or perhaps it's members on the Hill, both Democrats and Republicans, protecting their donors? What swamp dwellers want to bite the hand that feeds them campaign and party contributions? Of course, only the cynics would think such things possible, so surely neither of those two things have anything to do with the deafening silence on not closing the carried interest loophole.

Almost half of all Americans don't pay income tax; only about 46 percent file returns. Many of the people who don't file are poor and the tax code exempts them.

Everyone pays something in taxes, whether sales tax, fuel taxes, state taxes, etc.

However, for the middle and upper-middle classes, earning less than $500,000 federal taxes are burdensome, they limit a household's  ability save, buy large items, such as cars and refrigerators, buy a larger home, invest more in their retirement and fuel the stock market and make those Wall Street hacks more to ram through their loophole.

Cutting those taxes on the middle classes, cutting the corporate rate, and cutting spending along the way to shrink government, Washington would be spurring growth - more revenue and more in the pockets of citizens to spend as they please - and reducing the cost of governing.

Donald Trump was proposing a simpler, flatter tax code, one that truly benefited the working middle class. There are claims floating about that many in middle and upper-middle class would initially be dinged by the tax reform. But have no worries, eventually they'll see about $1,300 more a year in their bank accounts, or about $125 per month.

That pales in comparison to the tens of millions the uber-wealthy and the likes of Kushner, Cohn and Mnuchin are going to be pocketing due to the policies they endorsed for these bills, and which Republicans in Congress pushed through. Just remember: we're voting next year and there will be pain if this is allowed to stand.

For there to be real tax reform, there has to be a noticeable net gain for Americans in their paychecks. More than $125 per month. Given just how deformed this tax bill has become, one can't help but wonder if there isn't something else going on here.

The kind of strategy some Republicans in Congress might think helpful to them in the long term: undermine President Trump, take the short term losses in 2018, perhaps impeachment and then business as usual until reelection comes around in 2020. 

The other explanations are far more believable: The bunch of them up on Capitol Hill are either gators in a swamp or they are the type of professionals that cost a hell of a lot more than $125 will buy you in D.C.

Regardless, the next couple of weeks will determine exactly where Republicans stand: with their constituents back home or their fellow swamp dwellers and globalists. And America's citizens will then know what must be done in 2018.

Ned Ryun is a former presidential writer for George W. Bush and the founder and CEO of American Majority. You can find him on Twitter @nedryun.