What real tax reform looks like
President Trump needs help from Democrats.
A group of six senators is expected to dine tonight with President Trump at the White House in what's being touted as a "bipartisan working dinner" to address tax reform, multiple Congressional aides have confirmed to ABC News.
The Democrats expected to attend will be Sens. Joe Manchin (W. Virginia), Joe Donnelly (Indiana) and Heidi Heitkamp (North Dakota) and the Republicans are Sens. Orrin Hatch (Utah), Pat Toomey (Pennsylvania) and John Thune (South Dakota).
Donnelly, Heitkamp, and Manchin are also more likely to lend their support to a GOP tax package that includes widespread cuts and reforms because they are vulnerable heading into a risky midterm election.
Notably, the senators were the only three Democrats who did not sign a letter addressed to leadership that said the Democratic caucus would not support a tax overhaul that cuts taxes for the "top 1 percent" or adds to the government's $20 trillion debt.
Massive tax cuts for the 1% and Wall Street is the very highest priority of both Trump and the GOP.
Everything else is secondary.
Like the Repubs health care plan, the best defense is a good offense.
There are two of them readily available.
One of them by Bernie Sanders.
In fact, Sanders had detailed (and quite realistic) plans outlining how he would pay for his proposals on his website, and they were extremely popular with the majority of voters. He proposed a financial transactions tax on securities (supported by more than 60% of Americans); eliminating various tax loopholes for the rich and corporations (supported by an overwhelming majority of Americans); eliminating the cap on the payroll tax so that the rich don’t get the majority of their income sheltered from the tax (supported by more than 60% of Americans and by 80% if phased in); and sponsoring a modest increase in payroll taxes (it would add about $1.61 a week to the average household) to help pay for his expansive social programs.
The most controversial proposal in Sanders’ platform involved his plan to pay for universal single payer health care. He proposed a 2.2 percent increase on payroll taxes for households, and a 6.2 percent match by employers. This would have raised taxes, but it would have also substantially reduced the net amount Americans paid for health care, saving American families thousands of dollars. The average family of four paid $24,671 on health care in 2015.
And one of them by Ro Khanna.
Rep. Ro Khanna, D-Santa Clara, will introduce a bill Wednesday that would give low-income and working-class taxpayers a big tax credit — and have a massive price tag.
The plan would drastically expand the Earned Income Tax Credit, which helps people at the bottom end of the salary range. Low-income taxpayers without dependent children would see their credit rise from a maximum of $510 to $3,000, and families would see their maximum credit rise from $6,318 to $12,131, depending on their income and number of children. Economists say the increased credit would help compensate for the fact that working-class salaries have stagnated in recent decades even as the U.S. economy has continued to grow.
While the proposal isn’t likely to gain traction in the Republican-dominated Congress, Khanna hopes it will become a Democratic rallying cry.
“I think it’s going to be our party’s answer to Donald Trump on taxes,” Khanna said. “While he’s proposing tax cuts for the investor class, we’re proposing support for the working and middle class.”
Before you can know what tax reform needs to pass, you have to understand what needs to be fixed.
This Bloomberg article spells it out.
Let’s say you and I are neighbors. You’re an emergency room doctor, and I don’t work, thanks to a pile of money my grandparents left me.
You spend your days and nights stitching up gunshot wounds and helping children survive asthma attacks. I’ve gotten really good at World of Warcraft, winning EBay auctions, and frying shishito peppers to just the right crispiness.
Let’s also say we both report $300,000 in income to the Internal Revenue Service this year. Who pays more in taxes?
You do, by a lot. You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. I also have more flexibility to lower my burden with tax planning strategies and other tricks, and I get to skip about $24,000 in payroll taxes that you and your employer must fork over each year.
Taxing labor at a higher rate than unearned income gives the economy the wrong incentives and contributes directly to wealth inequality.