Tax reform plan won’t help middle class

To the Editor:

Now that the drama over the ACA is done, it’s time to move on to tax reform.

The current economic disparity between the upper economic classes (1 percent) and everyone else is debilitating to the overall economy and the situation has gotten progressively worse over the last 30 years. The benefits from the current economic recovery, such as they are, have mostly gone to those who already had most of the money.

People with great ideas and the energy to implement them must continue to be rewarded.  However, most of the current wealth disparity has occurred through our tax code that benefits and protects those who already have lots of money.  The current proposals simply continue the transfer of money from the middle to the top economic class.

Here are a few thoughts on what true tax reform might look like. The first principle is that it should reverse the flow of wealth from large corporations and wealthy individuals to the middle-class households who will spend it.   

The top tax rate could be cut to 35 percent since few people in that bracket pay 39.5 percent anyway. However, I would tax capital gains as ordinary income rather than the current flat 15-20 percent. The only potential exception might be capital gains on a primary residence.

I would treat employer provided benefits (like insurance payments) as income. Middle-class tax rates could be adjusted downward to compensate.  Employer 401k contributions would be excluded since that is the main retirement savings plan for people who have that benefit.

Reducing corporate taxes has some merit, with the following caveats. Small business taxes should be lower than those for large corporations since small businesses create more jobs. A 25 percent corporate tax is actually no real change since most large companies pay less than that already. However, I would throw out all corporate exemptions and exclusions and debate each one back into the code individually depending on whether it benefits the overall economy rather than a small sector.

The fundamental issue is whether tax changes benefit those in the middle and the overall economy. Tax cuts for the wealthy and large corporations (trickle down) don’t. The history of trickle down in the U.S. proves that it doesn’t. The recent tax cut experiment in Kansas proved a disaster. The current proposals are another bad idea that will hurt millions of Americans and fail to regrow the middle class.

John Gladden


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