The Tax Bill

Now that the tax bill has passed both houses and has been signed by President Trump, I figured that I’d make a few comments…

First: a couple notes.

-       Do not allow the media, or anyone else, to tell you that tax cuts cost the government ANYTHING. They don’t. Tax cuts allow Americans to keep a higher percentage of the money THEY work hard to earn.

-       Tax cuts don’t necessarily mean that employees (private side) get a pay raise. Although this is often cited as an example of how “Trickle down” economics DOESN’T work, it is far from the truth, as it doesn’t consider the whole picture. Two pieces of that whole picture:

o   If a person making $50k/year, for example, is taxed at, say, 25% (net), their effective operating capital is $37,500/year. If that person’s tax rate (net) is cut to, say, 20%, their new effective operating capital becomes $40,000, an INCREASE of $2,500/year (an effective pay raise to around $53.5k/year, taxed at the old…25%...rate).

o   If the price of goods and services REDUCES (because of tax cuts to businesses), the buying power of the dollar INCREASES which, in effect, is also a pay raise.

-       The notion of “tax cuts for the rich” is another lie, intended to mask the truth of how tax cuts improve the economy. The simple truth is that when taxes on businesses increases, they pass those increases directly to consumers. So, increasing taxes of “the rich” and businesses actually ends up increasing the taxes of consumers and make their (consumers’) dollars less powerful.

-       The notion that “tax cuts to the rich” DOESN’T help the poor and middle class……is a lie. Unless those “rich” folks are stuffing mattresses with money, their money is being invested (which finances companies, who invest in equipment and employees). And, with decreases in goods and services, the buying power of the dollar increases, irrespective of income level.

The vote

          It’s VERY important to note that no Democrats…..not a single one…..voted for to approve this tax package. It is important for the very same reason that it continues to be important that ZERO Republicans voted to approve Obamacare; it draws a CLEAR line in the sand, between how Democrats and Republicans view the Federal Government’s role in our lives. Democrats want to consolidate power at the Federal level, Republicans want power consolidated in the citizenry (in private hands, in keeping with the Constitution).

          In addition to the ZERO Democrats, TWELVE Republicans voted NOT to pass the tax package (these gutless pols should be remembered when next they are in campaign mode…):

-       Dana Rohrbacher (CA-48)

-       Darrell Issa (CA-49)

-       Walter Jones (NC-3)

-       Frank LoBiondo (NJ-2)

-       Christopher Smith NJ-4)

-       Leonard Lance (NJ-7)

-       Rodney Freylinghuysen (NJ-11)

-       Lee Zeldin (NY-1)

-       Peter King (NY-2)

-       Dan Donovan (NY-11)

-       John Faso (NY-19)

-       Elise Stefanik (NY-21)

So…….the abject failure of Obamacare is 100% OWNED by Democrats. How the tax bill affects the economy will be 100% owned by those Republicans who voted to approve it.

It CAN’T be clearer than that!

Deficit

-       The first thing that the media and Democrats will point to, as this tax bill goes to work, will be the inevitable increase in the deficit. And, yes, it WILL increase. But, a couple things must be considered:

o   If Congress does nothing about the automatic increases to entitlement spending, and does nothing to spending, in general, the debt will continue to increase in the long term.

o   After an initial increase in deficit, there will follow a decrease (assuming no changes in spending). Why? Because with more money in private hands, revenues will INCREASE (more manufacturing, more employment).

We have some VERY tough fights coming up, because we…..YOU AND ME…..must DEMAND that spending MUST be cut, and cut SEVERELY. And, while that is being done, other tax proposals must be put in place

o   A dollar-for-dollar direct tax reduction on charitable organizations that directly replace entitlements.

o   A near dollar-for-dollar direct tax reduction on ALL charitable giving.

o   A dollar-for-dollar direct tax reduction on foundations established that address health insurance, schooling, etc.

The objective here is to VASTLY increase the effectiveness of money spent on entitlements; specifically, by moving those entitlements from public hands to private hands.

Employment

-       Anyone who pays attention to ONLY U-3 Unemployment Rate misses the bigger picture. That bigger picture MUST include Labor Force Participation Rate. What this tax package will do, in the long term, will be to REDUCE the U-3 Unemployment number while INCREASING the Labor Force Participation Rate (under the last administration, while the media and Democrats touted the overall increase in employment, they failed to take into account the Labor Force Participation Rate which, taken into account, proved to be a net LOSS in employment over eight years).

Buying power (Addressed above).

          Bottom line? When you DECREASE prices of retail goods and services, you INCREASE the buying power of the dollar. So the SAME wage becomes an INCREASE in effective wage.

This tax bill reveals the fundamental difference between Liberal and Conservative philosophies.

Liberals believe that Government should be in control of power, money and the citizenry.  

Conservatives believe that THE PEOPLE should be in control of power and money (as is contemplated in the Founding Documents)….and the government.