GOP picks tax winners and losers

The Congressional Republican tax plan voted for by U.S. Rep. Mike Gallagher last week is being sold to us as a way to bolster an already solid economy, and in the short-run that may be true.

Rates are brought down across the board — permanently for some corporations, temporarily for most middleclass individuals. But the biggest problem with the tax plan as I see it is clear: it does everything possible to pick longterm winners and losers in the economy.

Here’s my background: first, I’ve got no skin in the game with either Democrats or Republicans. I don’t belong to either party although I do lean fiscally conservative. I’m a long-time downtown Appleton business owner — a reasonably successful one at that — and I expect budgets to be met and for investments at any level to be prudent. I’m simultaneously a social progressive. I believe strongly in public infrastructure, investments in public education, equal protections for all citizens, good governance and the tenants of economic, social and environmental sustainability.

To me, the Republican tax plan is neither fiscally conservative nor socially progressive. While it does reduce corporate tax rates for some companies, the vast majority of American businesses are left out of any benefit whatsoever. Excluded from any reduction in rates are service corporations — passthroughs such as S-corps and LLCs that actually represent most of the small business activity in America. Dentists, radiologists, accountants, investment fiduciaries and planners, insurance agencies, community banks, attorneys, consultants and many others receive no tax breaks at all. These successful companies are left out in the cold and will shoulder the burden of financing the massive deficits and long-term debt that this tax plan will create.

In contrast, real estate developers (such as President Donald Trump), large corporations and most manufacturers receive a sizable reduction in their tax rate. Now don’t get me wrong, manufacturers need as much support as anybody does, and that’s really my point: this Republican tax plan does everything possible to pick winners and losers in our economy when for years Republicans were committed to doing just the opposite.

I’m a business owner, and I happen to reject the notion that reducing taxes creates jobs. Any owner worth their salt won’t hire somebody just to have them stand around. Demand creates jobs, and in the short-run putting more money into the economy might be beneficial.

But digging into the numbers shows that the economic growth potential of this plan is minimal — according to nonpartisan estimates, it’ll cost U.S. taxpayers approximately $1.5 trillion over 10 years, but only generate $14.9 billion in new revenue over the same time period. Is this the conservative economic plan Rep. Gallagher supports?

If this is truly the best tax plan today’s Republican Party can come up with, I’m rightly worried. You should be too.

Crafting tax policy for a modern economy requires the input and support of experienced fiscal conservatives and objective progressives working together. It requires fresh thinking and new solutions. It requires policy that might look completely different than our current tax code, one that treats every taxpayer equally, and one that significantly broadens the tax base.

This congressional tax plan just doesn’t cut it.