The Trump White House’s release of a one-page framework for an overhaul of the U.S. tax code prompted sharp criticism from progressives for its vagueness and its apparent primary focus on helping the richest Americans. But if President Donald Trump and Treasury Secretary Steve Mnuchin are sincere that their overriding goal is simplifying the tax code and creating the conditions for sharp growth — not further enriching their fellow tycoons — then it is possible to simultaneously see their initial ideas as promising and dangerous.
Given the mix of inexperienced family members and questionably motivated political operatives among Trump’s White House staff, it can hardly be counted on to offer shrewd advice on many issues.
But Mnuchin is not Jared Kushner or Stephen Miller. Mnuchin came to Trump’s Cabinet as a brilliant, much-admired investor and businessman who has been consistent and somewhat reassuring in pushing back at the notion Trump’s tax reform would be a Trojan horse to further enrich the rich.
Trump’s starting point seems to promise tax cuts to mostly everyone, with its streamlined and lower income tax rates and doubled standard deduction. But in the larger picture, the volume and variety of tax breaks for the very wealthy is jaw-dropping. The end of the “death tax” on inherited wealth and the alternative minimum tax. The reduction of the highest income tax rate and the tax rate on investment income. Cutting corporate taxes so low that they could amount to a huge tax break for some small business owners who use an accounting maneuver to avoid income tax levies.
Yet for months, including in a presentation in Washington last week, Mnuchin has challenged the assumption this emerging tax policy is a blatant or barely disguised giveaway.
He has said repeatedly that his goal is not for rich people to pay less in taxes. Rather, it is to reduce the tax rates they pay while simultaneously sharply reducing the number of deductions and loopholes they use to reduce their tax obligations — and to scrub the tax code clean of incentives to park money overseas and of disincentives to business growth.
This hope is plainly alluded to in the Trump framework — “eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers” — but evidently not much believed.
There are big reasons to doubt a simple tax code is possible. Many of these deductions and loopholes don’t just help individuals, they help industries which will fight for them to the bitter end. And it’s easy to imagine GOP lawmakers and the president will handle the simple task — cutting everyone’s taxes — without doing the hard part — streamlining the tax code to turn it in a job- and revenue-creating engine without U.S. precedent.
That is where the danger — the extreme danger — comes in. Outside reviews of the Trump framework suggest its tax cuts could add up to $7 trillion to the nearly $20 trillion national debt in the first 10 years after its adoption just as the aging of the population puts immense additional pressure on the federal budget. That could be a disaster.
So the choice for the Republicans who control Washington is stark. Take on entrenched interests and do real tax reform — or cop out and do the same old GOP trickle-down tax shuffle. This isn’t just any old policy fight. It is a white-knuckle ride — because the stakes could scarcely be higher.
— The San Diego Union-Tribune
