It’s hard to cover the machinations of Washington, D.C., from the friendly wide open spaces of Eastern Oregon. It’s doubly hard when the issue being discussed in the Capitol is the American tax code, a mess so complicated that most Americans can barely make limited sense of it.
Now how in the world could a reader translate the whispers, rumors and actual reports of possible changes to the system — and not just what effect those changes would have on you and your family — but on millions of other Americans, our national debt, the Federal Reserve and the global economic system?
It’s near impossible, but that doesn’t mean we intend to give tax reform short shrift. Perhaps nothing is as important to our readers, and to the fiscal strength of our country and its inhabitants.
Republicans are in control of all levers of the federal government, having secured the White House and a majority in the Senate and House of Representatives in 2016.
Thus far, that hasn’t translated into any meaningful legislative victories, but tax reform is by far the best chance. Most Americans don’t trust Republicans when it comes to health care, but a majority do when it comes to fiscal policies. And tax reform also unites both the Trumpian and traditional wings of the Republican Party (who were divided on health care) as well as many moderate non-affiliated voters who yearn for simpler and lower taxes.
“Tax reform,” at its core, is supported by a majority of Americans. But how you slice and dice “reform” moves its acceptability ratings. If a majority of the tax cuts and “reform” is perceived to benefit corporations and the rich, its popularity plummets. Therefore, it’s curious to see the different tax packages currently being debated in the House and Senate, which are both centered around cutting taxes for corporations and the rich. That’s especially disappointing due to the fact that low-income Americans were the voters who swept Trump into the presidency.
Republicans argue that those tax breaks will eventually trickle down, but on that fact many economists remain unconvinced, and history hasn’t done much to sway them. An analysis of the House plan by the Tax Policy Center concludes taxes would decrease for all income groups in 2018, but by 2027, 50 percent of the tax benefits would go to those with incomes in the top 1 percent.
Both bills would almost double the standard deduction. But at the same time, they would eliminate the personal exemption for each taxpayer and dependent, which could actually cause large families to pay more.
Removing the medical expense tax deduction, as is proposed in the House plan, would be good for the deficit but bad for many Americans already struggling with high medical costs. The student loan interest tax deduction to be eliminated in the House plan is a significant help to many young people who pursue higher education. The Senate plan currently retains these deductions.
The Senate plan to eliminate federal deductions for state and local income and property taxes would affect taxpayers differently, based on local and state taxes. After opposition to a similar proposal in the House plan, it was amended to allow up to a $10,000 deduction for state and local property taxes.
There are hundreds — maybe thousands — of nooks and crannies in these proposals, each of which will have real-world effects on the wallets and budgets of all Americans.
And as they wend their way through Congress, the bills are sure to change form many times over in ways both obvious and obscure. The Republican party establishment will have their go at it, as will lobbyists and special interest groups, and the White House holds key powers as well.
Americans should remain positive about the possibility of true reform and its ability to improve our broken tax system. But we should demand fairness, simplicity and reasonableness from the tax code. And we should demand that the needs and desires of taxpayers outweigh the lobbyists and special interests, the corporations and the rich.
It won’t be easy. But if it’s done, the American people and economy — as well as the political party that ushers it into being — stand to benefit.