The House of Representatives has passed a tax reform bill and Republicans are high-fiving.

Hailed as a major victory though 13 Republicans did not endorse it and zero Democrats voted for it, it is legislation that will affect every American citizen and business owner. It was reported that, in the next 10 years, half the benefits will go to the top 1 percent.

The bill, introduced in early November, was pushed through two weeks later; without enough time to do any kind of solid research or have any bipartisan debate. The bulk of the benefits will be for corporations, whose rates fall from 35 percent to 20 percent, with the costs picked up by the middle class, indirectly through diminished services and loss of tax deductions.

The people who need it the least will benefit the most – help me understand why this is a good idea. The estate tax exemption doubles from $5.5 million to $11 million and then goes away completely in 2024. The new “reform” does away with the alternative minimum tax, enacted 50 years ago to prevent excessive tax-dodging.

The tax on passive income (like the kind President Donald Trump has from his giant real estate holdings) is cut to 25 percent, from the current 39.6 percent if you are in the upper bracket.

The top 1 percent already owns 90 percent of America; the notion that some trickle-down economics is going to help the poor and middle class is a broken glass that doesn’t hold water. Common sense says that giving a $1,000 tax benefit to the middle class stimulates the economy and the trickle-up effect will allow the rich to prosper. Giving the rich another $10,000 doesn’t create commerce; they don’t use it to buy cars, clothes or go out to dinner – they already have money to do those things. They simply add it to their portfolios.

Corporations' making more money does not trickle down to the lower and middle classes; who gets the dividends – the CEO’s and upper classes who have stock holdings.

Studies show most middle-class families will see a decrease, but that decrease goes away in five years, unlike many of the permanent decreases for the wealthy.

Though the tax codes are simplified (one thing I like), the itemized deductions that go away include the deduction of state income taxes, medical expense deductions, college interest deductions and several others that help middle-class Americans.

The bottom line is, the cost for these reforms will be about $1.4 trillion over 10 years, or $140 billion a year. While economists predict some growth in the economy, it will not be anywhere close to covering the costs.  With 75 percent of the benefits going to businesses, the 25 percent going directly back to individuals is lopsided, especially when you consider this will be inverted when it comes to who pays for these reforms.

When the pundits for tax reform to benefit the rich pontificate that the top 1% percent pay 60 percent of the tax burden, they fail to say these 1 percent own 90 percent of the assets – this tax reform does not reform anything, it simply puts more burden on the people who can afford it the least.

Tax reform is needed, but it is hard to understand why the American people can’t see this for what it is: tax relief for the rich, with scraps handed out to the “others.” Those scraps may feed you tomorrow, but middle America will be paying for them for years.

Think about it; this is a cross between a credit card scam and a Ponzi scheme. When the credit card companies give cards with credit limits that have no basis in reality, spending occurs and the endorphins created are uplifting; at least momentarily.

Spending money we don’t have and then have to pay back is the sobering fact; if the tax relief for middle-class Americans is temporary and the bulk of paying back the $1.4 trillion falls on the backs of ordinary people, the results should be clear — this is not a good deal for regular people.

Here is a sobering fact; if it is not good for the regular people, it is not good for the country. We need a long-term, sustainable plan that benefits the middle class and makes us stronger through trickle-up theory; trickle-down has been tried and created huge deficits. On the other hand, under President Bill Clinton, surpluses were achieved by giving tax breaks and incentives to those who needed them and used them to stimulate an economy that fueled and created surpluses.

Let me know why this is a good idea and help me understand.

We need our politicians to be better than this; we need them to be “for the people.”

“Men are capable of greater things than they perform. They are sent into the world with bills of credit, and seldom draw to their full extent.”

— Horace Walpole, novelist and essayist (1717-1797)

 

Editor's note: This column was corrected Nov. 30, 2017, to reflect the accurate yearly estimated cost, according to the Congressional Budget Office, of $140 billion, or $1.4 trillion across 10 years.