There’s no question that our country needs major income tax reforms to an IRS system that’s crookedly complicated, cruelly unequal, sizzled in politics, pocked full of loopholes, filled with shady tax shelters and the subject of heaping piles of misinterpretation and malicious favoritism.
To fix such a gargantuan problem, what would be a best course of action? We could start over with a short list of original tax principles, conduct an open search for best practices and win as wide a consensus as possible. We all know there will never be a tax system everybody likes.
Or, a few men could huddle in semi-secrecy in the middle of the night and devise a code that is sure to anger, confuse and divide us even more than we already are. That’s what just happened last week in the U.S. Senate. Our opinion here is not anti-GOP or politically partisan. It is in support of common sense, decency and limited government — which are all absent in this current federal tax proposal.
All tax reforms and tax law changes are measured in winners and losers. If these Trump era tax changes are made, it won’t take long to look around our Sonoma County and see who the winners and losers will be.
A few weeks ago, economist Christopher Thornberg was here to give his annual county-sponsored economic update and forecast. He had lots to say about tax reforms, Trump and the Republicans. (Thornberg is a registered Republican.)
“We don’t need tax cuts right now,” he said. “We need tax reform. That’s different.” The local and national economy is doing great and no amount of tax cuts will make it grow any faster, Thornberg said.
He strongly warned against the GOP proposals that he said would add as much as $3.5 trillion to the national debt. He said promises of tax-cut induced growth is a myth that has never happened. He said focusing on immigration reform, so the economy can gain more workers, would do more for the economy than anything else right now.
The real consequences of the proposed GOP tax overhaul for Sonoma County will be most felt in our recovery from the wildfires, because budget cuts have to be made to try to balance the deep income tax cuts being proposed for large corporations and the wealthiest class of taxpayers. Cuts to children’s health care programs and limited funding to the nation’s mental health and opioid crisis will also reach Sonoma County.
Also hidden in the 500-page tax proposal passed at 2 a.m. last week under the U.S. Capitol Dome are eliminations of individual subsidies under the Affordable Care Act, including specific women’s reproductive rights.
There have been lots of analysis and op-ed pieces that have called this GOP tax package “cruel” and “class warfare.” We will just call it the worst kind of government you could imagine.
At its core, this tax package will expand benefits to the very wealthiest taxpayers, without closing loopholes and, by their own calculations, it will add a minimum of $1 trillion of new debt. The proposal allows Google, Apple, drug, oil and other large corporations to keep their profits overseas or bring them home at criminally low rates of 7.5 to 14.5 percent. That’s while the rest of us (using the widest definition of the middle class) will pay rates of 15 to 25 percent, with new caps on our local tax, medical expense and home mortgage deductions.
If this tax overhaul actually becomes law, it promises to put a few extra dollars in our wallets over the next several years before the middle-class cuts expire. But if health care, imports, local fees and wildfire recovery costs go up, what good is a few extra dollars?
It’s hard to make best solutions in the middle of the night, is all we’re saying.
