Don't believe the headline hype on tax reform

I was talking with a friend the other day who lives in Europe who told me that, thanks to the one sided news people there are getting, mostly from CNN, most there think President Donald Trump is a terrible tyrant and the US is overrun by Nazis, racists and misogynists (thankfully, she doesn’t share these sentiments). She and I also talked about the lie we’re all hearing here: that poor Americans will be hurt by the Republican tax reform plan. 

It's not just cable news that's at fault. Print and web headlines are perhaps an even bigger problem. We're bombarded with so much information, all at our fingertips, that we now pick and choose what we will read in depth. This means many read a lot of headlines, but few articles.

If a person only reads the headline, though, it appears that the poor (and even the middle class) will have ever so much more tax burden. I’m sure that's exactly what the mainstream media are depending on. Here are just a few gems recently pushed out for all to see: “Poor Americans would lose billions under Senate GOP tax bill;”  “Senate Plan Would Raise Taxes On The Poor, Report Says;” “Senate tax bill would cut taxes of wealthy and increase taxes on families earning less than $75,000 by 2027.”

Here's how one publication put it exactly: "The committee’s (Joint Committee on Taxation) analysis...found that Americans earning $75,000 a year or less would also face large tax increases by 2027 because of the Senate’s plan to allow individual tax cuts to expire at the end of 2025."

So they are saying the bill will raise taxes because people's taxes will return to where they were when the tax cuts expire? Leaving aside the torturous logic behind that conclusion, it also relies on the premise that the cuts won't be made permanent. It's like saying George W. Bush was raising taxes on the poor by removing 10 million people from the tax rolls but having an end date on the plan in order to comply with reconciliation rules in Congress. Those tax cuts, by the way, were made permanent, for which Obama then proceeded to take credit for lowering taxes by virtue of not raising them.

The left is also claiming that, because the tax bill eliminates the individual mandate on health insurance, then, should the bill pass, millions of people would lose their health insurance. Well, that is nonsense. It only means that millions who are suddenly given the option to abandon the unaffordable, ineffective health insurance program that’s been forced on them would do exactly that: run from it in droves. And though Barack Obama and the Supreme Court tried to obfuscate the matter by calling the mandate a “tax”, a better word for a "tax" that is only paid when you refuse to buy service that you don’t want from a private corporation is “extortion.”

The other lie we’re hearing is that the rich would benefit and the poor and middle class would shoulder the burden. But the liberal elites making this claim should be well aware that the top few percent of wage earners in this country pay about 95% of the income taxes. If the rich did get a large benefit, it's because they are the ones paying the majority of taxes now, so any tax cut will proportionately affect them more. That's a good thing, and doesn't affect the poor negatively. It's not a zero sum game and, besides, the tax cut in question is targeted at businesses. Keeping taxes high on corporations – or raising them even higher – harms the poor and middle class even more because corporations simply pass those increased costs onto everyone else in the form of higher prices, higher fees and fewer jobs. Making America more competitive in the corporate world - which enjoys a 22% corporate tax rate on average in comparison with America's 35% rate - can only help more of us, not harm us.

But the liberal elites prefer to play the game of income equality, identity politics, and class warfare -- none of which, by the way, is a firm foundation on which to correctly run a country or, for that matter, an economic system. How nice if they would stop the false rhetoric already so we could work on common sense solutions to get the country back on track.

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