The last time a tax reform plan was being done, Ronald Reagan had his aide David Stockman go to Congress to explain how the new plan would work. Mr. Stockman announced to Congress that the plan was, in essence, to reduce taxes and increase spending, mostly on the military. This, Mr. Stockman said, would help us reduce the national debt. Then-Senator Mark Benson, at that hearing, pointed out to Mr. Stockman that his claim was ridiculous. “What you are offering us,” Senator Benson said, “is a credit card economy. That doesn’t work for families, and it won’t work for our government.”
Years later, Mr. Stockman admitted that what Senator Benson had said was true, that the whole thing was a lie, and recently Mr. Stockman denounced the present attempts to do exactly the same thing as a step toward disaster. Among other things, Stockman predicts that, if the Republicans’ present proposal is enacted, the stock market will drop by forty percent.
Despite all the sales rhetoric of those pushing the present proposal, the figures clearly establish that the tax relief being provided is almost exclusively for the top one half of one percent of Americans. Nothing makes that clearer than the proposed elimination of the estate tax, which will benefit only a few thousand of the very richest Americans (including the Trump family, which stands to gain more than one billion dollars). We desperately need to take the blinders off and discuss our tax program in a rational fashion. We can do that by setting forth what our goals are, and then fashioning a tax plan that will accomplish those goals.
So here is what we want. We want to reduce our national debt. We want to create jobs that pay a living wage. We want to have good roads, good schools and good medical coverage. We want to pay a reasonable amount for a reasonable defense program. Finally, we understand that good government costs money. It costs money to run our national parks, and we want to preserve those parks. It costs money to have good schools, and we want to have good schools. And for all that good government requires, we want to pay our fair share.
To accomplish all of this, I suggest the following. First, simplify taxes by reducing the number of tax brackets and eliminating deductions. Second, raise the standard deduction to benefit families. Third, eliminate the various loopholes akin to the so-called carried interest deduction and those rules allowing the maintenance of wealth off shore. Eliminate all of them. Finally, provide a tax credit for those who create jobs paying a living wage. Key the credit to the amount paid for these new jobs. Instead of relying on a promise from the wealthy to create new jobs, this will reward the wealthy for the fact of having created new jobs. Keep the estate tax, with a deductible equivalent to the value of a small business or farm operation.
Eyes open here. The present tax proposal is a method of rewarding those who make large campaign contributions. That has to end, or America as we know it will end. And it will not end in subservient peonage. It will end as it began, with revolution.