Yesterday, Republican leaders released their long-anticipated tax proposal. It is actually just a 9-page framework that will guide Congress as they develop and process a tax reform bill through regular order. The document is heavy on rhetoric and light on details, but there is enough information to make two initial conclusions: 1) Republicans are serious about making major, sweeping changes to the tax code and 2) Republicans are not serious about our nation’s fiscal problems.
First, there is very little disagreement on the need to overhaul our tax code. It’s been over 20 years since the last time the tax code was seriously reformed, and the combination of complexity, special interest goodies, and misaligned incentives is a major inhibitor to our economy. The proposal has a lot of great ideas that will be of tremendous impact to American families. Lowering rates and broadening the base is the hallmark of smart and effective tax reform. The proposal mostly follows that goal – though makes some caveats for the mortgage interest deduction, charitable giving deduction, and tax credits for dependents. For American businesses, the proposal makes much needed changes to the counterproductive way overseas profits are taxed, provides tax relief for small business owners, and incentivizes investments. All of these concepts will no doubt help spur economic and job growth in America.
If something is too good to be true, it usually is. Unfortunately, it appears that instead of doing the hard work to enact these proposals in a way that does not inflict even more harm on future generations and propel us closer to a fiscal reckoning – Republicans appear ready to take the easy road by using debt financing. The Committee for a Responsible Federal Budget (CRFB) projects that the tax proposals will cost $5.8 trillion, but only $3.6 trillion of it is paid for. That means Republicans will intentionally charge $2.2 trillion to future generations with interest, stealing millennial’s potential gains of tomorrow to pay for Congress’s irresponsible spending spree of today.
Rather than pare down expensive provisions, close more tax loopholes, or reduce federal spending elsewhere, Republicans will try to use smoke and mirrors to say that economic growth will pay for the entire deficit, a laughable claimthat is off by orders of magnitude. They will make this case with a straight face, but they know that this plan as it stands now will drive the debt up even further, contradicting every Republican talking point about fiscal responsibility over the last decade.
As there is with every tax debate, there will be lots of talk about fairness, a common strategy used by Democrats to spur class warfare emotions amongst Americans. But the real question of fairness is whether it is fair for one generation to continue to steal from the next? Republicans must reform the tax code with their children and grandchildren in mind.
Yes, economic growth is important. But it should be earned, not stolen.