We Hear You: Debt, Democrats, Deductions, Deficit-Spending, and the Tax Code

Editor’s note: We’ve had so much reader input on Republicans’ tax reform proposals that we’re devoting a second consecutive compilation to it. Enjoy, and don’t forget to write us at [email protected].—Ken McIntyre

Dear Daily Signal: Regarding the commentary by Rep. Mark Walker, R-N.C., I think members of Congress are bailing water in a sinking boat by throwing it elsewhere in the boat (“Tax Reform Where All Americans Win“).

“There is a tide in the affairs of men … ,” and the Trump administration is the first in my lifetime to be open to real, constructive reforms.

Cutting spending is the ultimate reform. A pure, fair federal government would shut down departments and establish a flat, equal for all, tax system. No business or corporate taxes, just a minimal flat income tax with perhaps a voter-approved federal sales tax. That would make the rich happy and the energetic poor more likely to be successful.

If it is not used properly, wealth depletes. Obviously, those that make their living taxing those that produce something useful have little faith in the drive to produce. They simply want to hide and protect their fiscal lechery.

I keep wondering why, in a nation seemingly bent on taking from the haves to give to the have-nots, the concept is not applied at the top of the food chain. Nationalizing the Federal Reserve Bank and rechartering it to prohibit deficit-spending would end our biggest expense, interest on the debt.—Michael Watson

There is overwhelming evidence that government spending is much too high, and that America’s economy could grow much faster if the burden of government was reduced. In the days before income tax and excessive government spending, America moved from agricultural poverty to middle-class prosperity. The government’s role was limited to national defense, police, and administration.

America’s policy of limited government certainly was conducive to economic expansion. However, now the government has moved on from limiting its focus to provide entitlement programs for the needs of the people. Since taxes are the only source of revenue for the government, they need to increase more and more as government’s role expands.

The more Americans rely on the government, the higher taxes will go and the harder it will be to reach economic recovery. Tax reform will require reduced spending and a smaller government, or else it will lead to further debt.—Wes Potts

How many of those 35,000 pages of tax code will be removed? And how will reduced taxes pay for government overspending? We need a 10 percent personal income tax with no deductions, no exemptions, and no other taxes allowed, coupled with a balanced budget amendment that includes the 10 percent rate. That would reduce the tax code to something understandable.—Jeffrey Moore

Dear Daily Signal: I’m writing about Sondra Clark’s commentary, “This Critical Part of Tax Reform Would Help Liberate Small Businesses.” As a small business owner for 20 years, I can tell you that a good deal of the most onerous compliance requirements come not from the federal government, but from state, county, and city governments.

Worst example: California’s unsecured business property tax. To comply, I was required to inventory every item in my shop, down to the pencils, original cost, and the date it was “placed into service.” Then, according to a depreciation formula, I had to pay a percentage of the total value of my business assets to the city.

Who came up with that? Most cities levy this tax on things you have to buy to run a business, things you have already paid sales tax on.

The other superheadache is the sales tax. I was required to keep track of the home county of every single customer, charge them the tax rate imposed by that county, then segregate my tax remittances into portions for each taxing district I “sold into.”

It is a wonder there are as many entrepreneurs as there are, given these realities.—Kristy McTaggart

I’m mostly OK with small businesses getting some tax breaks, but there are two concerns. What constitutes “small” and what is a legitimate deduction/expense?

I watch many contractors here in Florida driving around in really nice, tricked-out Tonka-type pickup trucks, and I don’t want to see the tax code supporting that. If they want a fancy truck like that, then they can have it the same way I would get one–which would be without a tax break helping fund the purchase.—Tim Dayton

If the tax were returned to the basis described in the Constitution, then the source of taxation (only at the township level) would be based on ownership of real property. And any bill requiring revenue would need approval of the Senate, each senator acting as the voice of the geopolitical unit that selected him or her (as opposed to the people–the House is responsible to them). Repeal the 16th and 17th Amendments, disband the IRS, and return the federal government to the structure defined in the founding documents.—Steve Craven

Dear Daily Signal: I like simplifying federal taxes, but what if you cut taxes and continue to run up expenditures ever higher (“Who Wins and Who Loses With Tax Reform“)? You end up running up the national debt ever higher. Obama doubled it in his eight years; looks like Trump wants to do the same. We need a balanced budget, folks, with payments made to reduce the debt.—Chris Vaughn

I agree with the tax decrease in general, but I also think major cost-cutting should be done (“Tax Reform Would ‘Liberate Free Enterprise,’ House Conservatives Say“). A major restructuring of the IRS to an accounts receivable agency within the Treasury Department. All the benefits that government bureaucrats receive to be realigned to correspond with benefits available to the citizenry. What I’m saying is, trim the fat while fixing the tax system. Randy Lewis

Sounds promising. I get a kick out of the Marxists who dwell on being negative even though they haven’t a clue as to what’s in the proposal. Eliminating the death tax alone would give families the opportunity to work together to prosper and carry on a business generationally. It also would motivate heads of households to move forward and invest, knowing the opportunity exists to keep the family financially stable without the government redistributing hard-earned wealth. Very pro-family move.—Bill Hansen


Dear Daily Signal: The positive thing I can say about the left is, they stick together like glue even though they are wrong 95 percent of the time (“Failure to Repeal Obamacare Not Bad Omen for Tax Reform, Key GOP Lawmaker Says“). The GOP, on the other hand, is like the game of basketball: The teams are the Harlem Globetrotters (the Dems) and the Washington Generals (the GOP). The Generals know they are going to lose, but are happy to be in the game.

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President Trump is the only one on the people’s side, and with both parties against him you can rest assured we will not get anything done until the sewer is drained. The go-along-to-get-along politicians like John McCain and the rest will block any attempt to fix the tax laws or the health care problem. Why? Because it’s not in their best interest.Chuck Faraci Sr.

Dear Daily Signal: Regarding Sen. Mike Lee’s commentary, “A Weird Trick to Make Tax Reform Happy,” the child care credit is just one more loophole. The IRS code is already jam-packed with them. The solution is a simpler method of paying our taxes. A national sales tax eliminates all of the loopholes and special deals for the wealthy.

It is imperative that we eliminate the IRS. With 30,000-plus pages of rules and regulations, it’s obvious they are a self-propagating growth on our economy. You can’t fix a defective government entity like that. Eliminate it and find something better.

Putting Band-Aids on it won’t fix it. When the Democrats are back in control (and they will be, you know) they will just roll all these GOP changes back and we’ll be right back where we are now: lost in the swamp.—Bob Terrell

My first choice would be the fair tax. Even the poor should have some input. When more than 50 percent of Americans don’t pay any tax, they will vote for whoever will maintain that. However, the child care credit is not a refund on taxes paid; it is money gifted to whoever has children even if they pay zero taxes. It has been used to give money to illegal immigrants, too, some whose children don’t live in the U.S. and were not born here. There needs to be a limit to the number of children this applies to, and it certainly should not be an option for more than two children, nor for anyone here illegally, and not exceed the amount of taxes owed. Otherwise it is just income redistribution.—Frank Armijo

A child tax credit helps only those who itemize, about 25 percent, and most are higher earners than middle class. The current plan would double the standard deduction, which helps everyone, and reduce complexity in the tax system. We need to stop picking winners and losers. Just tax everyone on a level playing field. In fact, it would be best just to tax a percentage of all income from all sources.Pauline Cornelius

The more children you have, the more government subsidies you need. School being one. Under this plan, those without kids are subsidizing those with kids. If you want lots of kids, fine, pay for them. These exemptions are what got us in trouble in the first place.Todd Jamison

Many taxpayers do not have children. An increase in the child tax credit helps only families with children. Look, an across-the-board tax reduction without adding additional forms would benefit everyone.—Jerry Roth

Dear Daily Signal: Regarding Rachel del Guidice’s report, “The GOP’s 3 Priorities for Tax Reform,” I don’t believe tax reform will ever be passed. To do so, the officeholders would have to yield significant income potential to the lobbyists who depend on exclusions, loopholes, etc., for constituents who depend on the legislators to perform these acts. And in return, the legislators are rewarded with reelection campaign donations to ensure that the loopholes and preferences are never rescinded. Simple tax reform will never be enacted because for legislators, getting reelected is dependent on the donations of those who benefit from a screwed-up taxation system.Rich Hampel

Right now a married couple with one dependent gets to exclude the first $24,750 from their income if using the standard deduction and the three personal exemptions. $4,050 more for each additional dependent. Under this framework, that drops to $24,000. Gee, thanks for lowering our taxable income.

I know, I know, they say they are going to expand the child tax credit. I say to my kids all the time that there is a tooth fairy; doesn’t make it true. What if the dependent isn’t a child? What if that couple makes too much money and gets phased out?

This whole framework is a sham for which they are trying to get popular support by using great sounding, but unsubstantiated, talking points. There’s a surprise. Until we get detailsmany that RINOs needed to pass this will be unable to stomachthis is no better than their failed attempt to uphold another promise and repeal Obamacare. Vote all these jokers out. They are a disgrace.Matt Grabel

My tax plan follows. 

For individuals: Define what is earned and unearned/passive income, which could be the same as now. No deductions for anything. Two tax brackets, the first $30,000 would be taxed at 2 percent, everything over $30,000 at 5 percent. No separate grouping for married, head of household. The person who earned the income (or owned the asset for passive income) would be taxed. We still could do tax withholding.

For businesses and corporations: Tax them on net sales/revenue. The rate could be low, say 5 percent or less. They then could know what their tax will be and would have no need to make business deals to take advantage of a silly tax provision. They could present their financial statements based on sound accounting practices and not social engineering of the tax code. The federal government could still charge fees where it can match the fee to the service provided. No other taxes.Al Celmer

Dear Daily Signal: Well, now, this guy profiled by Rachel del Guidice understands economics (“Why This Cookie Mogul Is Fighting for Tax Reform“). Sadly, the only thing Democrats and Republicans understand is how to play to their bases.

In the case of Democrats, the people on the government dole, and in the case of Republicans, the large corporations. The taxpayer in the middle is left out. Both parties kiss him off. End the entire system and build the taxes into the purchases that all people buy. Set up a mechanism to prevent the national government from increasing taxes the way it loves to do.Don Rhudy

We often hear the question, “If you cut taxes, how are you going to pay for the cuts?” That is a stupid question and completely inconsistent with their other claims. The same people claim that if the government spends a dollar in a given community, it will have a multiplying effect as the recipient spends the money and that recipient again spends the money, and on and on.

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My answer is that any individual, business, or government entity should start by determining income, budgeting it, and spending only what is on hand. Any money they borrow for additional uses should include a payback plan as part of that original budget.

The best aspect of this tax proposal is the lowering of corporate taxes. It would result in companies staying here or coming back to access the most efficient workers in the world. They would be able to acquire and improve real estate, equipment, and other facilities that would result in hiring more people. They also would be in a position to raise pay to reflect productivity. In many cases, they would be able to lower prices.

Some would have you believe that companies would just fritter the money away on executive bonuses or, heaven forbid, give it back to the investors. The fact is, however, that corporations are in business to make money. While some savings would go to bonuses and investors, the bulk would be invested in the business to increase sales and income. That’s how it works.

Regarding revenues supposedly lost, the government actually would gain revenues due to a more robust economy with more employed people buying goods and services and paying taxes. That, along with fewer so-called loopholes that enable people to hide income, would improve the government’s bottom line. This is a winner.Ken Marx

We need tax overhaul: Do away with the powerbroker IRS and remake the tax systems. Or we need another Boston tea party. Taxing my Social Security is ridiculous. Then land, auto, food, water, blah blah. We are being taxed to death.—Tonie Lesia Dalton

Dear Daily Signal: Regarding Rob Bluey’s interview with Rep. Kevin Brady: It is very bad tax policy to “protect” the first dollars of family earnings (“GOP’s Top Tax Writer Promises More Jobs, Bigger Paychecks With Reform“).  That policy has resulted in Congress taking more and more people off the taxpaying rolls, and has left taxpayers in the extremely precarious position of being a virtually indefensible, permanent minority.

Every citizen must feel some pain when Congress spends our money. If they do not, the republic does not work. Today, the top 20 percent pay almost 90 percent of all the income tax, while earning only 53 percent of the income. Half pay nothing. Thus, the majority mob feels no pain at all when Congress spends the money of the voiceless, powerless minority.

Targeting tax cuts to the middle class further marginalizes the higher earners who already are paying the bulk of all the income tax. It would make them pay an even larger share. The tax burden must be shared more democratically in order for the republic to survive.Stephen Eldridge

Well and good, Mr. Brady. I look forward to a simpler tax return. However, your plan has several major weaknesses. Most workers and investors would still be required to file a tax return, along with the records maintenance and other costs associated with tax compliance.

We’d still have the burdensome reporting and tracking requirements and other invasive limitations on our economic activity. Congress and the IRS imposed these ostensibly to make tax evasion more difficult and to expand tax collection to income from outside the country.

We’d still have the IRS keeping tabs on our private financial affairs. Law-abiding people shouldn’t have to put up with that.

The income tax never stays reformed. I’ve seen a number of tax reforms over the years, and within a few years the code is corrupted and encrusted with new or resurrected “gotchas” and “gimmes.” The income tax is just too tempting for social engineers.

Here is my suggestion: Pass your reform for the short term, but include a complete repeal of at least the individual income tax and payroll taxes within two years. The replacement should be an end-user sales excise tax on luxury goods.

This would be permanently simple; it would reach a broad base without being financially crippling; it would be cheap and simple to enforce; it would require relatively few returns to process (saving lots of money at the IRS and the Treasury Department as a whole). The ostentatiously wealthy would pay far more than the frugal working poor person, but it would not unduly burden the poor. Now that’s a really fair and simple tax plan.Paul Bade

Dear Daily Signal: Some Democrats probably will support Trump’s plan, as Fred Lucas reports the president’s saying (“Trump Predicts Some Democrat Backing for Tax Plan“). Tax cuts are popular and in any event, some Democrats live in red states. I consider it a foregone conclusion that any tax cut plan will pass.

The tax cuts will be heavily skewed to the wealthy, of course, so they won’t help 98 percent of voters. The whole thing about the cuts causing a flood of economic activity that will create better-paying jobs, and lots of them, is BS.

Trump said himself that “salaries will rise … the world will flock to the U.S. for American labor.” Oh, they will, will they? By the world’s standards, we’re still overpaid. Why would they want to buy products made here with $20-an-hour labor when they can buy those same products made in China for $5-an-hour labor?

No tax plan is going to address that; no tax cut is going to make GE start selling refrigerators below cost.

And the GOP will do this without any commensurate reduction in spending, of course. In a year or two, with the deficit blowing up, the GOP will start saying we need to cut spending even more on things like health care and your retirement savings. Everyone (except the liberals, and no one ever listens to them) will have forgotten that the tax cuts were supposed to boost federal revenue and therefore make it revenue neutral, instead of threatening our retirement savings.

And you know what? They’ll come up with a great idea: The best solution to lagging federal revenue is … more tax cuts. And so it goes.Edward Buatois

There must be safeguards and stiff penalties to prevent corporations from using repatriated profits to buy back their own stock or pay out those monies in the form of dividends (“Conservatives Encouraged by Republican Framework for Tax Reform“). Without these safeguards, corporations will not use the monies to expand operations in the U.S. and create more jobs.—Ron Bartlett

Dear Daily Signal: Regarding Adam Michel’s commentary, I am going to wait and see what comes out of Congress. (“Why the GOP Tax Plan Is Great News“). Based on past history, every time Congress has cut my taxes, they actually increase, and I am retired middle class.

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I agree with the basics as put out, except perhaps for a lack of a tax cut for the rich. These are the people who hire and grow the economy. This appears to be a populist tax cut rather than one based on conservative principles designed to boost the economy. We’ll just have to wait and see.Randy Leyendecker

Get rid of tax deductions for all expenses due to activities involving professional sports. These deductions benefit the highest-paid employees of professional football, baseball, etc., who have average salaries of millions per year.James Rust

I really only want a tax plan that funds the U.S. government for what it is supposed to be doing by the Constitution and prevents the government from using the tax hammer to do things it is not intended to do, like catch criminals it can’t catch any other way.

I want a government that figures out ways not to spend money and live without borrowing. That is the real fix to the tax system. Not inflation. The rest of the world seems to be able to do many of the things the U.S. does at a far lower cost, and frequently better.Pee Kellner

Whatever happened to the idea of a flat tax rate across the board, with no deductions and no special interest concessions? It would be the most fair tax ever, would be easy to work with and understand, and we would all pay less tax in the long run. I’m glad the GOP is trying to get something done, but this proposal still perpetuates a lot of wrongheaded ideas.John T. Reagan

No. The only real “tax reform” is to get rid of the income and investment tax completely. The entire income tax code and the IRS should be eliminated. We should keep 100 percent of what we earn and replace it with a national sales tax (exclude food and medicine).

Everyone contributes because everyone buys something. Congress no longer could use the tax code to punish people and hand out favors. Oh, it should be capped at 15 percent maximum with a 75 percent “yes” vote of the people needed to increase it. I will be dead before we ever see something this fair, simple, and practical.Alan Grosso

Dear Daily Signal: Regarding the commentary by Anthony Kim and Patrick Tyrrell, “Our  Tax Code Is a Self-Inflicted Injustice“: Tax reform is absolutely needed, but should not be done in a vacuum without considering budgeted spending, a debt retirement plan, a balanced revenue (tax) vs. spending plan for a whole fiscal year. Congress has been woefully lacking in this most basic job requirement over the past several (eight?) years, and we should be irate at lawmakers’ flippant attitude regarding their responsibilities as public servants.Jennifer McCann

Let’s talk about the required minimum distribution, or RMD. The government told me I needed to save for my retirement by establishing IRAs and 401(k) plans. Now it’s time to pay up for my thriftiness and financial perseverance. I get it. However, why make me have to withdraw more funds from my IRAs than I need to live on to pay you taxes?Larry Roche

The corporate tax is not the only reason. Low wages, cheap fuel and electricity, lack of need for safety measures, lack of protective laws all play a part. This article assumes that if a company pays fewer taxes, that will be passed on to the workers. If this is true, then why are companies that have their money overseas (and pay little or no American corporate tax) not paying workers a lot more?Mariann Hornlein

Dear Daily Signal: In his commentary, “Government Tax Reform Would Mostly Help Workers,” young Adam Michel claims: “Businesses invest money in their workplace so that their employees can be more productive.”  More productive for who? The data shows productivity and wages started to diverge in 1979. Since then, wage growth has been less than half productivity growth (EPI).

Job creation occurs when American businesses gear up for vibrant and growing markets, no, or stagnant markets? No jobs. No growing profits.

Thus, capital investments are called for when higher profits are demanded and possible via return on investment. Economic history demonstrates few workers benefit from higher profits alone. Yet, modern corporate financialization has highly skewed the labor/capital balance to capital.

Labor, now a commodity, usually does not get a higher cut due to increased productivity. Wall Street does. Those gains go to stock buybacks, mergers and acquisitions, dividend distribution, and executive bonuses. Wall Street skims the cream of that financial activity in lieu of natural business growth driven by the market.

How are free markets improved so they grow and become more vibrant? Higher wages and salaries do more than profits that only benefit the wealthiest among us. Thus more wealth and income inequality. Less democracy.John Kominitsky  

Adam Michel is so correct when he says employees end up paying the corporate tax. This is especially true when they have to compete in the international market and cannot raise prices. I do not understand how reasonable people would want any business taxes.—Kevin Johnson

Why do people keep pretending corporate taxes are not a scam? They are paid by consumers in higher prices. They are paid by employees in lower wages and benefits. They prevent investment and expansion that would lead to more workers being hired and better products for consumers.  Except for employment for tax lawyers and giving politicians the ability to demagogue, corporate taxes have no real benefit. Workers making higher wages and new workers being employed would add to the tax base and eliminate one stage in tax collection. The corporate tax should be zero percent.J. Earl Sumner

As government cuts to education at all levels affect its quality, especially for low-income level people, the cost of postsecondary education of all kinds is being shifted to students and their families, making it unaffordable especially to low-income workers and their families.Diana Hecht Gahman

Higher profits benefit everyone. Those profits go back into the business as employee benefits, wages, bonuses, equipment, and training as well as expansion and new hiring. Well, they would if those areas weren’t so highly taxed.

And most businesses in the U.S. are small and privately owned, not the huge, publicly traded companies. Want to help 80 percent of America? Lower the corporate income tax rates. They aren’t free markets when the government keeps interfering.Blair Christensen

Casey Ryan helped compile this column.

Source material can be found at this site.

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