The tax reform proposals offered by the Republican House and Senate and supported by the Republican President are woefully inadequate to address the concept of “reforming” the tax code. At best, both program proposals only chip away around the margins of the code without enacting serious, necessary reforms.
To be sure, there are tax cuts for various levels of income for individuals, and there are serious tax cuts for big business, with more modest cuts for small businesses and sole proprietorships. There are no substantial proposals for cutting spending in either proposal. In fact, the proposals seek “revenue neutral” solutions – a concept that runs counter to the very idea of reform. After all, if revenue is same-old levels, then so are the processes and priorities that make up the tax code. The government is merely nibbling at the edges of the tax code under the guise of reform, while presenting tax reform “theater” that marginally appears to change things but does not in any real way.
People are migrating from top-down centralized work places toward individualized dispersed work styles but the government is not responding to newly generated needs with responsive tax code reforms.
Take, for example, the proposed post-card filing form presented by Speaker of the House Paul Ryan. Yes, it is smaller (by dimension) than the 1040 and 1040 EZ forms used by most people, but the underlying information used to fill it out is exactly the same. Just because one is a post-card size and the other is the size of a sheet of paper does not mean filing one’s taxes gets any easier. The average taxpayer is still responsible for navigating the labyrinth that is the US Tax Code, calculating deductions and maximizing returns. If the form were reduced to the size of a postage stamp taxpayers would still require the assistance of an accountant or tax software to complete returns.
Woe be to those who deign to file taxes as a small business operation of any type. The government isn’t proposing to reform any of the byzantine rules, regulations and secretly held interpretations of the IRS for those filers. While there are some proposed minor tax rate deductions for small business there are no serious reforms that would help to generate growth in the economy by the increased activity of small entities. Big business has never been the driver of economic growth and recovery since the founding of the Republic. Such economic renewal is always driven by the ability of individuals and small operations to compete for capital resources. The so-called reforms offered at this point do not help achieve that goal.
President Trump is notorious for favoring big business, often barring small business from a seat at the table, and Congress is following suit. This is folly. The world is changing dramatically from big business driven economic activity to that largely operated by individuals and small entities. The economy is shifting towards what are called the Gig Economy, the Share Economy, the Internet Store Economy and the Freelance Economy. People are migrating from top-down centralized work places toward individualized dispersed work styles but the government is not responding to newly generated needs with responsive tax code reforms.
The Republican Party is demonstrating a lack of ingenuity and foresight with tax reform proposals that are neither democratic nor republican. Nor will their proposals meet the needs of new economic realities, to the detriment of the nation’s economic health.