Our View: Income tax cut bill languishes with little attention
Why aren’t income tax cuts getting more love?
The U.S. House of Representatives approved making permanent the massive income tax reductions that went into effect this year. The Senate has the chance to do so as well, but probably won’t.
Why? The public argument is that the income tax cuts add hugely to the federal deficit, up to an additional $1.5 trillion over 10 years.
Hold that thought for a moment, because the real reason is different. The tax cut law limits state and local tax deductions to $10,000, which affects taxpayers in states with high state and local taxes. These happen to largely be Democratic strongholds.
Those with larger state and local tax bills would still benefit from the federal cuts, but the advantage of using tax loopholes to deduct the state and local payments is gone under the new law.
All politics are local, as the tax cut debate illustrates. With this provincialism in mind, then, why aren’t taxpayers in other states pushing to make the tax cuts permanent with the idea they would benefit greatly?
The deficit comes to mind. But the funny thing about the federal deficit is that it doesn’t have to grow if the Congress can reduce spending. Less spending isn’t even a topic these days but it certainly should be.
To make the case to the American public, ideally before the general election, Republican Senators should craft a spending reduction plan that, if approved, would decrease or eliminate deficits caused by the tax cut.
That won’t happen, at least not before the election. As much as the bulging, money-eating federal bureaucracy is despised for its high cost, few are willing to sacrifice any benefits, directly or otherwise, they receive from the government.
The advantages of the tax cut are still sound, even with the deficit issue. In pushing the cuts, the Trump Administration made supply-side arguments that lower taxes mean more money in the pocket for individuals and business. Businesses with extra cash, the argument went, would spend the money to hire and to pay employees more money.
Naysers said it wouldn’t happen, that the country’s path is toward a jobless recovery with the rich getting richer and the poor poorer.
Yet large companies gave out bonuses when the tax cuts were enacted. Wages are going up. Didn’t Amazon just raise its internal minimum wage to $15 an hour?
Small companies aren’t Amazon, of course, and some are still having a tough time of things.
A return to higher tax rates will hurt them, making things even tougher. The same holds true for individuals, some of whom may not have seen big wage increases.
The federal government needs more, not fewer, tax cuts and elected officials need to rein in the spending to match.
— Today’s News-Herald