Donald Trump’s Tax ‘Plan’ a Gamble Not Worth Taking [OPINION]
So, the former Republican in me came out when Trump announced his tax idea (it isn't even a plan yet), because I agreed with many of the elements.
I like simplifying the tax code to three brackets and eliminating many of the deductions/loopholes. Do I mind if the rich benefit from the plan? No. As long as the middle and lower class also benefit I don't care if it helps EVERYONE.
I also like the idea of reducing the corporte tax - though 15% is WAYYYYY too low.
I also agree with eliminating the Estate Tax. I loathe the whole concept. You work your entire life to have something for your children, then they can't afford to enjoy the fruits of your labors. Yes, yes, I know this affects mostly the rich, but they are parents too.
Here's the problem as I see it (and as many others do): you can't cut that much money from the country's coffers on the "chance" that it will spur the economy, which will lead to more tax revenue to make up for that which was cut.
That's called gambling. And in most cases the house, not the gambler wins. And Trump is the one gambling with our tax money.
The problem is that the plan is predicated on Big Business using the money they save to re-invest in the economy. This follows the Republican mantra that Big Business will do what is best for the country.
Not so much.
Big Business only cares about Big Business. Yes, there are those companies that "do the right thing," but they are few and far between. In most cases they don't care about you and I, unless you and I are stockholders, sit on the Board of Directors, or factor into their bottomline.
I can speak from direct experience when it comes to this failed conceit.
Back in the 80's when this was last tried by Ronald Reagan (remember "Trickle Down Economics") my father was the president of his company at the time. He told me that there was no way he was going to "re-invest" the money his company was going to save through corporate tax breaks. He was not going to hire new people, or expand the company.
Instead, he was going to squirrel it away and save it for when the economy eventually went south again (which economies always do). The economy is cyclical. It will always correct itself. If it goes too high, it will eventually come back down. If it goes down, it will eventually come back up. Often times without government's help.
So, he did. And the economy did - take a downturn. And as a result his company was able to ride it out. But there was no re-investment. No new jobs.
And that is what I expect most companies will do with the money they save under Trump's plan. They will squirrel it away.
Will the economy grow under Trump's plan? Probably. There will be a short-term burst of investment. Just as there was a brief surge in the Market after he was elected, but it will be just that - brief. And it will definitely not achieve the 3+% growth he and his advisors are counting on to counter the cuts.
Which will leave the country sitting at the table with no chips, no cash and the house demanding it's money.