About the GOP’s proposed tax reform…
The talk is all about how we need it to stimulate investment and therefore boost the economy.
To this, I have one question: When is the last time you handed out money, no strings attached?
If you want a particular result, you hand out the money with conditions. We call these “performance guarantees.” Look at any contract, you’ll see them there. Nobody in their right mind makes large financial commitments or investments without firm guarantees that their money will be dedicated towards producing the agreed-upon result.
In the past, when our government wanted to promote certain behaviors (such as technological innovation, creating jobs, or building new infrastructure) they granted tax breaks once the desired behaviors occurred. Such things are all over the place in our tax code: if you do “X” (say, give money to a charity), you get a break on your taxes AFTER THE FACT. Not before. Long ago, our government concluded that charities are of benefit to our society for a wide number of reasons. Therefore, it did (and still does) encourage us to support them, and gives us back some money once we do so and if we do so – not before. Such practices provide strong incentives for people to engage in the desired behavior. Outright gifts do not.
It may be that a Tax Cut, or at least a streamlining of the tax code to eliminate needless complexity and harmful and/or unnecessary loopholes, is desirable. But, that is not what is being assembled and negotiated in the halls and backrooms of Congress at the present time.
So why, when they have so many very smart people crafting this, is the GOP assuming a “Tax Cut” with no strings attached will produce any positive results? They definitely know better, and there are plenty of examples from past administrations of how to go about successfully achieving the goals they claim they want to see; and the current approach is NOT one of them. In fact, recent articles suggest that it is pretty clear companies have no intention of reinvesting the windfall they’re about to get into the desired goals: more investment, more jobs, a strengthened economy.
I’ll ask the question again: When is the last time you handed out money, no strings attached?
We call that charity.
America’s big corporations and billionaires don’t need charity.
They need incentive.
The Here and the Hereafter 
What are your thoughts regarding a flat tax or a national sales tax?
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A flat tax would inherently benefit the wealthy and unfairly burden the poor. -Bad idea.
A national sales tax seems attractive, but the complexity required to negotiate and implement such a thing in a way that is balanced and fair is far beyond the abilities or interest of either political party at this time.
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A flat tax benefiting the rich and hurting the poor-that claim is inherently dishonest. Even under a flat tax, you can still have a certain amount of income being tax-free and the flat rate is applied on any income level above that. So, poor and most middle class would pay nothing. Liberals seek equality of outcome. That is a flawed idea. Conservatives seek equality of opportunity.
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I disagree. For one thing, a few years back under George Bush Sr. we had the “luxury item tax” which was similar to what you suggest. It didn’t last long, being cancelled 2 years later because it failed to achieve it’s goals. But on the other hand, you raise a good question: could a flat tax be structured in a way that is reasonably fair to the poor and places the majority of its burden on the rich?
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Here is an idea: Get rid of personal income tax on the 1st $50, 000.00 a family of 4 earns. So, if you earn that or less, you pay nothing. Not even payroll taxes. If that family earns $57, 000.00 a year or more they pay 25%. Capital gains would be subject to the same rate.
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Here is an idea: exempt the 1st $50, 000.00 from federal income tax. So, if you earn that or less, you pay nothing. Not even payroll taxes. Assuming that family earned $58, 000.00 a year or more, they would pay 25%. All loopholes and many deductions would be scrapped, maintaining only the deductions for charitable contributions, business purchases, which would have limited deductibility, as well as tax deductibility for educational expenses if you have a job where you earn enough money to pay for college tuition. Many republicans advocate reductions in the capital gains tax. Some advocate increasing it to where it was under Ronald Reagan. What I would do if we had a flat tax is tax labor and investment at the same rate of 25%. Poor and most middle class would pay nothing, basically a marginal and effective rate of 0%. Upper middle class and the wealthy would pay the 25% tax rate.
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