U.S. president Donald Trump kept his promise and signed the GOP tax cut bill into law before leaving Washington, D.C. for Christmas vacation.
Now the only question is whether the new law will keep his broader promise to the American people …
“All of this, everything in here, (means) really tremendous things for business, for people, for the middle class, for workers,” Trump said upon signing the bill. “I consider this very much a bill for the middle class and a bill for jobs.”
Is that true?
Voters certainly don’t think so. And from our perspective, they have every reason to be skeptical.
As this news site has consistently argued from the beginning of this process, the tax reform bill signed by Trump in the Oval Office on Friday failed to cut deep enough, failed to cut in the right places (i.e. relief for middle income earners and small businesses) and failed to make corresponding cuts to government.
That’s why we’ve referred to the legislation as a “missed opportunity.”
Does that mean we would we have voted against the bill? Or declined to sign it had it come across our desk?
Even though this legislation fell short on multiple fronts, we believe it is destined to have some positive impact on the American economy. We’re also tremendously pleased the legislation strikes down a key cog of former U.S. president Barack Obama’s socialized medicine law – the individual mandate.
Upheld as a tax by the U.S. Supreme Court in 2012, this constitutionally dubious provision penalized more than six million Americans an estimated $3 billion simply because they declined to participate in the health insurance marketplace.
That’s wrong on multiple levels … and Trump touted the mandate’s repeal as one of the key selling points of the new law.
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“Remember, the most hated part of Obamacare is the individual mandate, which is being terminated under our just signed tax cut bill,” Trump tweeted.
Limited government advocates praised the demise of the mandate, arguing it was a critical first step in unraveling Obamacare.
“Thanks to President Trump and Congress, the tyranny of the individual mandate is coming to an end,” noted Rick Manning of Americans for Limited Government (GetLiberty.org). “Now … every American will once again have what they are entitled to by right, a choice to participate in the insurance market. No more guaranteed customers. Now companies will have to compete on price to attract individuals to their plans. This is the first step to repealing the health care law.”
Indeed it is … and it is a profoundly welcome development.
Still, the GOP’s failure to target a majority of its tax relief to middle income earners and small businesses – and its failure to make the relief it did provide to them permanent – will necessarily limit its effectiveness in expanding the economy.
Ninety-five percent of businesses in America are either sole proprietorships, partnerships, limited liability corporations (LLCs) or S-corporations – i.e. “pass throughs” that see their income taxed on the individual returns of their owners. These businesses deserve the same tax relief as the large corporations – but they won’t be receiving it in this bill.
“Tax relief must stimulate investment, to be sure – and there is certainly a need to reduce America’s punitively high business tax rates,” we noted in our original assessment of the GOP plan. “But tax relief must also act to stimulate the consumer economy – which continues to struggle.”
Also, “Republicans” in congress failed to incorporate Trump’s proposed budget cuts as part of their tax reform bill – unnecessarily limiting the amount of relief available under federal deficit restrictions.
Still, Trump remained optimistic that skeptical voters would eventually come around to the benefits of the proposal once they began to feel its positive impacts.
“I don’t think we are going to have to do much selling,” he said.
We hope he’s right … because that would mean the economy is improving.
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