Fair and simple taxation

The Tax Cut and Jobs Act which was passed by the Republican-controlled Congress did not have the support of a majority of voters (see polling results below) primarily because most of the tax cuts went to corporations and the wealthy. A second round of tax cuts that would focus on middle-class taxpayers is now under consideration. President Trump has said that Congress will pass it, however the bill has not yet been introduced into either house of Congress. We support tax relief for middle-class taxpayers.

During his campaign, President Trump won a great deal of support for taxing hedge fund managers at the same rate as ordinary taxpayers. This would involve closing the carried-interest tax loophole. That loophole was not addressed in the Tax Cut and Jobs Act. We support closing that loophole.

We also believe that, if corporations are considered to be people, with the same rights as people, they should pay the same taxes at the same rates as everyone else.

Legislation that has been passed by Congress:

The Tax Cut and Jobs Act [H. R. 1] was passed by Congress in December of 2017.

Major party platforms on this issue:

The Democratic Party platform:

“We will offer tax relief to hard working, middle-class families for the cost squeeze they have faced for years from rising health care, childcare, education, and other expenses. Donald Trump and the Republican Party would do the opposite and provide trillions in tax cuts for millionaires, billionaires, and corporations at the expense of working families, seniors, and the health of our economy.”

“At a time of massive income and wealth inequality, we believe the wealthiest Americans and largest corporations must pay their fair share of taxes. Democrats will claw back tax breaks for companies that ship jobs overseas, eliminate tax breaks for big oil and gas companies, and crack down on inversions and other methods companies use to dodge their tax responsibilities. We will make sure that our tax code rewards businesses that make investments and provide good-paying jobs here in the United States, not businesses that walk out on America. We will end deferrals so that American corporations pay United States taxes immediately on foreign profits and can no longer escape paying their fair share of U.S. taxes by stashing profits abroad. We will then use the revenue raised from fixing the corporate tax code to reinvest in rebuilding America and ensuring economic growth that will lead to millions of good-paying jobs.”

“We will ensure those at the top contribute to our country’s future by establishing a multimillionaire surtax to ensure millionaires and billionaires pay their fair share. In addition, we will shut down the “private tax system” for those at the top, immediately close egregious loopholes like those enjoyed by hedge fund managers, restore fair taxation on multimillion dollar estates, and ensure millionaires can no longer pay a lower rate than their secretaries. At a time of near-record corporate profits, slow wage growth, and rising costs, we need to offer tax relief to middle-class families—not those at the top.”

“Democrats believe that no one should be able avoid paying their fair share by hiding money abroad, and that corrupt leaders and terrorists should not be able to use the system of international finance to their advantage. We will work to crack down on tax evasion and promote transparency to fight corruption and terrorism. And we will make sure that law-abiding Americans living abroad are not unfairly penalized by finding the right solutions for them to the requirements under the Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR).”

The Republican Party platform:

“Republicans consider the establishment of a pro-growth tax code a moral imperative. More than any other public policy, the way government raises revenue — how much, at what rates, from whom, and for whom — has the greatest impact on our economy’s performance. It powerfully influences the level of economic growth and job creation, which translates into the level of opportunity for those who would otherwise be left behind. Getting our tax system right will be the most important factor in driving the entire economy back to prosperity.”

“Wherever tax rates penalize thrift or discourage investment, they must be lowered. Wherever current provisions of the code are disincentives for economic growth, they must be changed.”

“We will eliminate as many special interest provisions and loopholes as possible and curb corporate welfare, especially where their erosion of the tax base has created pressure for higher rates.”

“Any value added tax or national sales tax must be tied to the simultaneous repeal of the Sixteenth Amendment, which established the federal income tax.”

“We propose to level the international playing field by lowering the corporate tax rate to be on a par with, or below, the rates of other industrial nations. We endorse the recommendation of the National Commission on Fiscal Responsibility and Reform, as well as the current Administration’s Export Council, to switch to a territorial system of taxation so that profits earned and taxed abroad may be repatriated for job-creating investment here at home. We believe American companies should be headquartered in America. We should reduce barriers to accomplishing that goal.”

Polling on this issue:

Polling on the Tax Cut and Jobs Act shows that a majority of voters do not approve of the bill. According to a Monmouth University poll, 34 percent of Americans approve, compared to 41 percent who disapprove. In a Quinnipiac poll, 39 percent approved and 46 percent disapproved. An Economist/YouGov poll found 38 percent approving and 40 percent not. A RealClearPolitics average of polling on the tax law indicates that about 36.1 percent of Americans are on board with the tax measure and 43 percent are not.

Raising the tax rate on personal income above one million dollars a year, which is currently just below forty percent, so that income above one million dollars is taxed at fifty percent was supported by 59% of voters, with 25% opposed and 14% neutral. This included 71% of Democratic voters, with 15% opposed and 13% neutral; 50% of independent voters, with 31% opposed and 19% neutral; and 53% of Republican voters, with 33% opposed and 12% neutral. (From a poll by GBA Strategies.)

Save billions of dollars by eliminating tax loopholes for large corporations that ship jobs offshore, and use that money to make long-term investments in rebuilding our transportation infrastructure, expanding Internet access to rural areas, and increasing access to clean renewable energy was supported by 74% of voters, with 15% opposed and 10% neutral. This included 88% of Democratic voters, with 5% opposed and 6% neutral; 69% of independent voters, with 17% opposed and 13% neutral; and 65% of Republican voters, with 24% opposed and 9% neutral. (From a poll by GBA Strategies.)

Closing the tax loophole that allows millionaire hedge fund managers to pay a tax rate of just fourteen percent on their massive profits while working men and women pay much higher rates on their salaries and wages was supported by 63% of voters, with 25% opposed and 10% neutral. This included 70% of Democratic voters, with 23% opposed and 8% neutral; 60% of independent voters, with 24% opposed and 13% neutral; and 59% of Republican voters, with 29% opposed and 11% neutral. (From a poll by GBA Strategies.)

Our view:

Redistribution of wealth by means of taxation is the root cause of much of the friction attending political matters.  We favor minimizing redistribution by using the “benefits-received” principle to the greatest extent possible.  For example, an excise tax on gasoline should be used to finance road and bridge construction and maintenance, the cost of policing the roads, and street signs and traffic signals. Constructing and maintaining stadiums for professional sports team should be financed with an excise tax on tickets to games and other events at each stadium.