Get ready for the next round of talking points from Trump and the GOP about their tax-reform awesomeness now that the Senate Budget Committee has approved the so-called tax reform bill called the Tax Cuts and Jobs Act (TCJA). The party line vote moves the bill out of committee and advances it to the full Senate.
The committee’s actions were praised by the White House as “an important first step toward passing historic tax relief and reform” according to a statement released by Press Secretary Sarah Huckabee Sanders.
In reality, there’s nothing “historic” about TCJA, not to mention that it provides little-to-no-relief. If you want to know what historic tax “relief” really looks like, look to Ronald Reagan.
Reagan’s tax reform package in 1981 cut income taxes by 25 percent across the board, and a second reform package in 1986 reduced the number of tax brackets to two: 15 percent and 28 percent. As a result of this truly historic reform, some taxpayers saw their tax rate fall from 70 percent to 28 percent.
Reagan tax reform measures also provided ways for taxpayers to further reduce their tax liability with things such as allowing all workers to contribute to tax-deductible IRA’s and indexing tax rates for inflation.
The tax reform plan pushed by Trump and the GOP has four tax brackets plus a “surcharge” rate of 46 percent to be applied to a portion of the income earned by the “very wealthy” with the current 39.6 percent rate applied to the rest of their income. Additionally, the rich-but-not-very-wealthy will continue to pay the current rate.
Another non-Reagan element of the GOP bill is that it actually increases the tax liability of middle and upper income tax payers, even if they fall into a lower bracket, thanks to the elimination of several deductions, including:
- Mortgage interest
- State and local income taxes (SALT)
- Property taxes
- Student loan interest
- Medical expenses, which continue to skyrocket because the GOP won’t repeal Obamacare.
Clearly, this tax reform bill isn’t all it’s cracked up to be, which is why we call it TRINO (Tax Reform In Name Only).
In another one of the Twilight Zone moments we’ve come to expect in Washington’s parallel universe, Sarah Huckabee Sanders also stated that the White House and the Senate shared a goal of “fiscal responsibility through tax reform.” Considering the fact that it will add trillions of dollars to an already out-of-control budget deficit, calling this travesty fiscally responsible is an amazing claim.
Or should I say, historic?
Originally posted on The Strident Conservative.