What's Good, What's Bad About The New Tax Bill (And Why I Don't Love It)

Earlier today, House Republican passed a new tax reform bill. It’s a slight alteration from President Donald Trump’s original proposal.

I don't love paying taxes so I’m generally in favor of lower taxes (hardly an unpopular opinion there). But, before I get into my opinion and why I’m not ecstatic over this proposal, here’s a 50,000-foot view of the plan.

Basically, the middle class won’t see a ton of change. Individual tax rates either go down slightly or stay the same and the tax code will be slightly simpler. That also means less deductions. So, depending on how many deductions you make, you’ll either pay slightly less or potentially slightly more in taxes, but the difference won’t be huge either way.

The real tax cut goes to corporations, as the corporate tax rate lowers from 35 percent to 20 percent. America has one of the highest corporate tax rates in the world; if this bill goes through the American corporate tax rate will be highly competitive. The bill also benefits small businesses as well and eliminates the estate tax (a tax on big inheritances).

 What’s good about it

First off, a simpler tax code is a good thing. While there are good arguments for each and every deduction, the reality is most deductions are the result of lobbyists pushing because it benefits their organization. And more deductions help people who have a lot of money to spend on high-end accountants – i.e. the rich.

For those reasons, I believe in a flatter, lower tax.

Second, I know people are going to jump on corporations paying less taxes, but there are benefits to it (aside from the rich getting richer). That means more money in the economy, more incentive for companies to invest in new jobs and it makes America more competitive globally.

Even in the worse-case scenario where companies pocket all the money and don’t hire a soul, it’ll make the stock market boom. That’ll lead to more money into the economy, which will result in a stronger economy and more jobs. So, while lowering taxes on corporations causes many to react in disgust, there’s no denying there are economic benefits to it.

What’s bad about it

The lower the taxes, the better. Ideally, you’d have no taxes on anyone. The reason we have taxes is to fund the government.

Yet few articles touch on the second part of it. If you cut taxes, what goes away? Under this plan the government is funding healthcare slightly less (and I bet that gets removed by lobbyists if it does pass). But mostly this just makes the deficit and our national debt grow, as the tax cut isn’t met with matching government cuts.

And we already operate under a deficit and have been for years.

So, it’s not fiscally sound. You can’t cut taxes when you don’t have enough money coming to fund the government as is. But the truth is our government almost never brings in as much as it spends, so, at this point, it feels like that argument is a moot point.

What I really don’t like about it is how it’s a huge tax cut for corporations and virtually no tax cut for anyone else. It’s like if you had enough money to purchase 10 presents for your friends and family. Would you use all that money to buy 10 presents for one family member?

Of course not, you’d spread it around.

Politically, I don’t understand the logic, either. If you cut taxes for everyone, many more people would support the bill. If you cut taxes for corporations only, only corporations would support the bill.

To me, I’d rather see say a 5 percent tax cut for all, instead of a 15 percent tax cut just for corporations.

For those reasons, I’m not sure I would support this bill. A more across-the-board tax cut makes more sense – and would be far more popular politically as well.

Those are my thoughts. Would love to hear yours.