OPINION:
Taxes may be the apple in only the taxman’s eye. Everybody else sees red. As Congress tinkers with the tax code, Americans have looked with skeptic’s eye at the process, suspicious that it’s just another carnival scheme to steal a larger chunk of their paychecks. We’ve all heard this carol before. Three decades ago, taxpayers anticipated alterations of tax law with similar apprehension and found themselves the better for it. It might happen again.
Tax reform has been the holy grail of President Trump’s strategy to kick-start the U.S. economy into a higher gear. Under pressure from the president to reach a deal before the Christmas sleigh bells ring, House and Senate Republicans finished knitting together their competing proposals last Friday and Democrats pelted them with mudballs, rocks and whatever else lay at hand. The stage is set for a final House vote on Tuesday, then a vote in the Senate, and finally a White House signing ceremony.
The agreement follows a mind-bending process that House Ways and Means Chairman Kevin Brady likens to solving Rubik’s Cube. A revised tax code is expected to trigger cascading waves of money for everybody. Among the bill’s provisions are a reduction of the corporate tax rate from 35 percent to 21 percent and the top individual rate from 39.6 percent to 37 percent. It would double the standard deduction for families to $24,000, double the death tax exemption, include a deduction of up to $10,000 in state and local taxes, and eliminate the much-despised Obamacare mandate.
Americans have watched the tax tussle with trepidation, wondering whether the final product would leave them better or worse off. A Gallup poll of attitudes toward the Republican-engineered tax legislation found that 57 percent of respondents doubt the cuts will improve their family’s finances, and 53 percent don’t think it will help the nation, either.
It’s no surprise that Republicans hold a more upbeat view than Democrats. Fifty-two percent suspect tax reform will make it worse, and 38 percent think the deficit will improve.
Some of the skepticism could be chalked up to decidedly unfavorable views toward the Washington swamp. President Trump’s approval rating languishes in the basement at 37 percent, according to the Real Clear Politics average, and approval of Congress is mired even deeper at 13 percent.
It’s not the first time this drama has unfolded. In 1986, with Ronald Reagan championing tax cuts, Americans held a similarly dubious view of reform crafted by Congress. At that time, according to Gallup, only 18 percent thought their taxes would ease under the plan and 41 percent believed taxes would range higher. Only 28 percent thought the legislation would invigorate the economy, 15 percent predicted it would leave the nation worse off, and a 57 percent majority reckoned things either wouldn’t change much or they wouldn’t express an opinion.
It was not exactly a ringing endorsement of the Gipper’s offering. Nonetheless, both houses of Congress passed the legislation with solid majorities. Subsequently, gross domestic product started growing at an annual robust 3.5 percent and the Reagan era is viewed in retrospect as a golden age.
After slogging through the regulatory thickets of the Obama era with 1.5 percent growth, Americans are desperate for a lift. With GDP ticking upward already to 3 percent, the nation, says the president, is “on the verge of an economic miracle.” If Congress delivers the tax bill before Christmas, the president has promised that Americans will see lower taxes and bigger paychecks by February. That would be something from Santa, indeed, and Santa would be revealed as that old guy in a red suit with thinning yellow hair.
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