The intended purpose of Reagan-style tax reform is to stimulate economic growth and provide better living standards for all Americans. While this is certainly still the intention of leaders in the House and Senate, they have foolishly adopted the Left’s class warfare arguments in an attempt to defeat the popular left-wing perception of tax cuts only benefiting the rich.
Republicans have a truly once in a generation opportunity to reform our broken tax code. Democrats are fighting this needed reform tooth and nail, and will continue to do so no matter what concessions Republicans make.
While a message about “middle-class tax reform” may be a popular argument, even with many on the right, Republicans would be better off communicating to their constituents why tax reform for all Americans will benefit everyone.
Self-described “democratic socialist” Sen. Bernie Sanders (I-VT) called the tax plan “morally repugnant and bad economic policy.” Sen. Bob Casey (D-PA) tweeted that “cutting taxes for the super-rich won’t create jobs or grow incomes for middle class families.” Senate Minority Leader Chuck Schumer (D-N.Y.) even gave a speech on the Senate floor and claimed that Republicans, “designed their tax plan to be cheered in country clubs and corporate boardrooms."
News flash. It hasn’t worked. These are not people who are willing to negotiate on tax reform to any degree.
If Republicans continue to adopt “class warfare-lite” arguments, it will only make true comprehensive tax reform and relief even harder to pass. Worse of all, they could be forced to gut true tax reform and replace it with nothing more than a symbolic version of it.
This isn’t simply a foolish argument for them to make; it is also entirely antithetical to the purpose of true top-down tax reform.
One of the worst proposals in the current draft of tax reform is the provision to dramatically increase taxes on nonqualified deferred compensation, which has become a favorite target of Sen. Elizabeth Warren (D-MA) and other left-wing politicians.
Essentially, nonqualified deferred compensation permits many Americans to defer their earnings to future years, and pay taxes on them when they withdraw that money near retirement. Under the new tax plan, people will be taxed at the moment their money vests, instead of when it is withdrawn in the future.
These function as retirement accounts for many salespeople, executives, and other business leaders, and will now be taxed whether they’ve actually received the money.
This provision will raise almost no revenue for the federal government, and is simply being used as a marketing tactic that plays into Bernie Sanders’s and Elizabeth Warren’s unbased class warfare arguments.
Tax reform is for all Americans, and should be implemented in the style of President Ronald Reagan’s 1986 reform. We must significantly reduce the tax burden for everyone, instead of trying to pay for minuscule middle-class tax cuts at the expense of the rest of the nation. We will all be better off if Republicans stick to their conservative principles and pass truly comprehensive reform.