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TAX REFORM: TOUGH BUT NECESSARY
By Dave Rocker of The Rocker Group LLC.
WASH POST: NEW CBO NUMBERS OFFER DOSE OF REALITY
• “If current law remains in place, “federal debt would reach an unprecedented share of GDP [in 30 years]…”
• “…reform should be deficit-neutral, lest short-run benefits be swamped by long-run crowding-out of investment by government borrowing, as the CBO suggests.”
• “By refining incentives to work, invest and produce, tax reform — especially corporate reform aimed at improving global competitiveness — could help remove structural barriers to growth.”
• “…merely stabilizing the long-run debt at the current elevated level, 77 percent of GDP, would require a combination of tax increases or spending cuts equal to nearly 2 percent of GDP per year, as compared with what’s called for in current law, starting in 2018. In dollar terms, the CBO notes, that would be a fiscal adjustment of $380 billion next year — a huge political challenge and impossible without trims to the middle-class entitlement programs Mr. Trump has promised not to touch.”
SO WHAT TO DO?• A Univ. of Maryland survey
suggests more Americans want reform that raises revenue over reform that adds to the deficit.
• Trump wants to cut capital gains and dividends to a rate half that of ordinary salary and wages. Only 15% of Americans endorse the idea.
BORDER ADJUSTMENT
TAX?• House Republicans first floated
the idea.• Taxes imports and rebate taxes
on exports.• Could make up for money lost by
lowering corporate tax rate.• Critics say the expense is passed
on to taxpayers who pay more for goods and products.
TOUGH CHOICES• Last major tax reform was in 1981,
but many of those changes were only temporary.
• Interest groups and lobbyists put immense pressure on lawmakers not to negatively affect their industry.
• Tax reform is like having a passion for riding a motorcycle…you may feel you need to get out and ride, but it’s dangerous. Any misstep could end in calamity.
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