Actions speak louder than words. In the world of politics, public policy priorities offer far more insights into the thinking, values, and allegiances of political figures than their rhetoric. Unfortunately, politicians are fairly apt at using spin to muddy the water when their policy preferences appear to contradict their expressed views. Republicans, for example, will always cite the need to safeguard the viability of the free market when it comes to stripping away regulations that provide consumer protections. They argue they are helping consumers by ensuring a competitive marketplace exists, even if they are blatantly catering to some special interest group. Democrats will claim they are protecting the rights of everyone when they are catering to the special interests of their base.
With that in mind, the Trump Administration has pressed forward with a policy agenda that takes the US toward the Right. On certain issues, such as free trade, the President’s views also align with the more traditional priorities of those in the middle as well as those on the Left. There are also areas where the Trump Administration, like all Presidencies, blatantly favors special interests groups over the broader interests of the nation. The rollback of environmental and other regulations definitely favors the industries targeted by the regulations, but there is room for debate as to whether or not their repeal favors US national interests. When it comes to Trump’s tax priorities, however, he clearly reveals how both special interests and his professional bias influence his policy preferences.
Not only does Trump’s proposed changes to the US tax code disproportionately favor wealthier US taxpayers and businesses in general, his targeting of all but two tax deduction for eliminations addresses the concerns of special interests favored by Trump. Billionaire real-estate developer Trump would, for example, retain the deduction for interest paid on mortgages. Home ownership helps persevere family wealth, but only those who make enough to itemize their tax returns can benefit from this deduction. To boot, it appears to help subsidize the cost of owning a home, so buyers are willing to pay more. This, subsequently, helps increase prices, which prices lower income families out of the housing market and makes it more expensive for all first-time home owners to enter the housing market.
The Trump would, however, eliminate the tax break businesses receive for providing their employees health insurance, which would imperil the health insurance of most Americans. One can argue that this is a special interest tax break, but workers are not a special interest group. They are the American People. One could also argue government should not exert undue influence over businesses and communities. Government does, however, represent the American People and manages the affairs of the governed community, so government is charged with promoting pro-social behavior.
Marriage is a pro-osocial behavior, because it strengthen family and social cohesion, thus government should not inadvertently penalize marriage by taxing married couples at a higher rate than if they were two single people, i.e. the so-called marriage penalty.
This is also why the charitable deduction, which Trump would preserve, is a legitimate tax deduction. What qualifies as a pro-social charitable, tax-exempt cause raises a lot of questions and opens the tax code to the influence of special interest groups, but it is a worthwhile and necessary risk. Government must promote, not undermine, socially responsible activities and business practices. Where there is potential abuse of the charitable deduction, the hassle of dealing it is small in comparison to the cost of eliminating charitable deductions altogether . Encouraging businesses to fulfill the interests of workers, including their well-being in terms of health, is also an example of the government supporting the health of individuals and communities..
Furthermore, the Trump Administration is also seeking to eliminate the ability of taxpayer to deduct their State and Local taxes, which reflects the broader priorities of certain Republican factions. First and foremost, taxing the money paid to State and Local governments is a blatant example of double taxation. Ending the deduction would allow the Federal government to raise a great deal more money to offset tax reform, but it would also put pressure on State and Local governments to either freeze or decrease their tax rates. Given Republicans allegedly favor State and Local control over Federal, this assault on the ability of State and Local government to conduct business contradicts their expressed values.
It would also encourage lobbying in State and Local governments where transparency is generally more lax and lobbying is far more pervasive than in Washington. As a consequence, it encourages and forces States to rely more on sales taxes and fees, which are highly regressive ways of taxing, forms of double taxation, and easily evaded by national businesses and highly mobile, more affluent individuals. In other words, this policy preference caters to those businesses and individuals that have enough money to avoid paying taxes and will do it at all costs.
Republicans have increasingly become known for their fanatical obsession with cutting taxes. Ending the deductions for State and Local taxes paid would allow for overall rate cuts, but it would also institute a “starve-the-beast” approach at the State and Local level. Quite frankly, taxes are a necessity for proper governance. The consequence of not taxing is debt and/or a collapse of proper governance. In raising the “costs” of taxing for Sate and Local governments, the Federal government would be discouraging State and Local governments from taxing their populations and businesses.
Because local State government provide the greatest amount of representation, State and Local government can be more responsive to the needs of the governed. It is, therefore, the responsibility of the Federal government to support State and Local governments instead of undermining the authority and power of State and Local governments. Eliminating the ability of taxpayers to deduct their State and Local tax payments from their federal bill undermines the power of State and Local governance. It also reveals the loyalty of proponents to businesses and affluent individual over proper governance and the American People. The burden, versus cost, of proper governance should be spread eventually among taxpayers, not just those cannot avoid paying taxes.
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