FEAR LEGISLATORS BRINGING GIFTS

The Greek Poet Homer, in his famous epic poem Iliad, tells the story of the Greeks attacking the walled city of Troy.  The Greeks laid siege to the city, but they could not breach Troy’s mighty wall.  They finally succeeded by pretending to give up and leave and by placing before the gates of the wall a huge wooden horse.  The Trojans opened the gates and brought the horse inside the walls.  During the night, the Greek soldiers who had hidden inside the horse came out and opened the gates for their comrades, who then conquered the city.

Before they brought the horse into the city, the Trojan leaders debated what to do with it.  During that debate, one of them made an observation that has rung through the ages:  “I fear the Greeks, especially when they are bearing gifts.”

The present legislature has come to the American people bearing what is announces as gifts.  House leader Paul Ryan has called it a tax relief plan for the middle class.  Politifact has analyzed Mr. Ryan’s statement, and it has found the statement to be mostly false.  Sad experience tells us to fear legislators bringing gifts, and so it is critical that all of us understand the details of this particular “gift.”

It is first important that we agree on what the American people need.  First, they need to have a living wage, an income sufficient to pay for the cost of living and to raise a family.  Second, they need to have a government that provides for needed services, such as roads and schools and police and fire services and regulation of environment and health care.  Third, they need to know that the government has the money to pay for such things, and so they need to make sure that the national debt is paid down at least to a reasonable level.  So what they do not need, what they cannot afford, is to slash those services and add to the national debt.

With that in mind, I am presenting here an explanation of the tax proposal made by the Republican majority in the legislature.  It is not a tax revision.  The tax code is many hundreds of pages, and this proposal is only nine pages long, and much of that space is spent making vague generalities.  What I give you here is a summary of the actual proposals made in those nine pages.

The tax plan proposed by the Republican legislators makes the following basic changes to our tax system:

  1. Reduce the number of different tax brackets from seven to three — 12%, 25% and 35%.  The proposal does not lay out the cutoff points for each of these tax brackets.  Currently the top tax bracket is 39.6%, and it applies to all taxable income over $418,000.  So under this plan those with annual taxable incomes above $418,000 would have their taxes reduced by 4.6%.
  2. Raise the standard deduction to $24,000 for a married couple and eliminate most itemized deductions, such as for state and local taxes.
  3. Reduce corporate taxes from 35% to 20%.
  4. Repeal the alternative minimum tax, which was put in to require the wealthiest who, by various measures in the present tax law, have avoided all tax, to at least pay some tax.
  5. Repeal the inheritance tax.  Presently the inheritance tax applies only to estates worth more than six million dollars.  So this affects only those with estates beyond six million dollars.
  6. Reduce the maximum tax bracket for those owning small businesses from 39.6% to 25%.  So, for instance, if you owned a business as a sole proprietor and declared all your income on your personal income tax rather than on a corporation, your maximum tax bracket would be 25% rather than the proposed 35%.

There are several other proposals to allow money presently held outside of the United States in order to avoid taxes to be brought back to the United States without being taxed.

As you can see, there are very few details given in the proposal.  For instance, we are not told at what levels the tax brackets will apply.  For instance, at what level is the 25% tax applied?  At what level is the 35% tax applied?  However, assuming that the legislature will use the levels presently applying today, here are some of the effects of this proposal.

  1. Under the proposed changes, the lowest taxpayers would receive, at most, a reduction of $1138.50 (the average tax reduction for these folks would be substantially less), while those in the highest tax bracket would receive substantially more.  For instance, on a taxable income of one million dollars, the taxpayer would receive a tax reduction of $46,000.  To put that another way, those in the highest tax bracket would get an 8.5% increase in after-tax dollars, while the bottom 95% would get a 1.2% incease in after tax dollars.  So, if your taxable income is $25,000, your taxes would be reduced by $300.00.
  2. The reduction in corporate income and estate tax revenue would result in a loss of revenue for the government of several trillion dollars over the next decade.  So the national debt would increase substantially, even with the severe reductions in government programs proposed by Republicans to make up for the loss of government income.
  3. Under this plan, the middle class gets only a very slight benefit in tax reduction, while the wealthiest receive the following substantial items:  elimination of the estate tax, elimination of the alternative minimum tax, reduction of income tax.  Corporations and very wealthy individuals would also benefit from various other provisions eliminating taxes or granting new exemptions or deductions.

One can plainly see from these details that this plan provides for massive tax relief for the wealthiest among us at the cost of an equally massive increase in the national debt.  Here, for what it is worth, is my own view.  We, the American people, the average Jane and Joe, need and deserve help from our government.  This is why we even have a government.  We need that government to have the money it needs to provide the basic services that government should provide to all its citizens.  We, those same Janes and Joes, do not want a free ride.  We want to pay our fair share for those government services.  This tax proposal does nothing of the sort.  Instead, it gives substantial tax relief to precisely the group that least needs it, the top 5%, and in doing so it seriously limits the income the government needs to provide those basic services.  Put this plan in, and the next discussion we will have is about cutting social security benefits, Medicare, schools, veterans’ benefits, etc., and even then we will be increasing a national debt that will threaten to drown future generations.

All of these things are discussions we need to have, and all of that is up to you, dear reader.  Like it or don’t, but remember the Trojan horse.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.