Just as Republicans rallied around President Trump to save their Supreme Court majority and prevent a Hillary Clinton presidency, they must now rally around proposed tax reform to save their congressional majority and prevent a Rep. Nancy Pelosi (D-Calif.) Speakership.
With nothing to run on following their health-care reform failures, Republicans trail Democrats by 9 percentage points in current 2018 election polling. The Senate’s likely passage this week of a federal budget, which would allow tax reform to proceed under budget reconciliation, indicates it’s time for the Republican Party to put aside differences to get the 51 Senate votes necessary for passage.
Tax reform, as proposed by the recently released Republican leadership framework, would bring long overdue relief to hardworking taxpayers who haven’t benefited from the stock market surge of recent years.
Eight years into the economic recovery, recent surveys find four in five workers still live paycheck to paycheck, and two-thirds of those earning $40,000 a year or less can’t cover an unexpected $400 expense.
The tax framework brings some relief to these workers by doubling the zero tax rate bracket for a married couple to $24,000. For families, zero tax would extend further because of an expanded child tax credit.
Additionally, the marriage penalty, which hits the working class the hardest, would be eliminated, among other provisions, to help these forgotten Americans. As a result, they could keep a little more of their earnings each paycheck to help cover life’s growing costs.
The framework’s call to reduce small business taxes to 25 percent from the current 40 percent would also be a huge boost to the backbone of the American economy and the middle-class people they employ.
According to a nationwide survey of small business owners by the Job Creators Network, the small-business advocacy organization I co-founded, most respondents would reinvest their tax cut savings in employee raises, new jobs or business expansion.
Therefore, a small-business tax cut would not only reinvigorate small businesses but also the communities in which they operate. Lowering the small-business and corporate tax rates is also a necessary part of making U.S. companies more competitive on a global scale.
These dramatic benefits are enough to generate support from the vast majority of Republicans. Despite media bleating this is a tax cut for the rich, even moderate Republicans who helped kill health-care reform should support such small-business and middle-class relief so long as this case is made.
But given the multi-leg stool that is the Republican Party, it’s not only moderates that must be convinced. Sen. Rand Paul (R-Ky.), among others from the libertarian wing of the party, have criticized the proposal for not being conservative enough.
While his conviction is admirable — I, too, think a tax plan that cuts small-business rates further to, say, 15 percent could do even more good — demanding the perfect plan would kill the good one. It would scare off the moderates needed for passage.
Libertarian Republicans can continue to demand the perfect in rhetoric, but they must support steps toward it in reality. Several blue-state congressmen, like Rep. John Faso (R-N.Y.), have also criticized the framework’s elimination of the state and local tax deduction.
But federal taxpayers shouldn’t have to subsidize the punitive state tax rates in liberal states like New York and California. Republican members of Congress from these places should support this tax reform in hopes it spurs constituents to demand similar tax relief at the state level.
Then there are the party’s fiscal hawks, like Sen. Bob Corker (R-Tenn.), who criticize the proposal because of its potential impact on the federal deficit and debt. This caucus will surely only grow after the Joint Committee on Taxation puts out its inevitable pessimistic revenue projections, of which its media allies will run wall-to-wall coverage.
Again, I appreciate the conviction here. The country is over $20 trillion in debt, and deficits are projected to grow. But the debt is skyrocketing not from lack of revenue but from out-of-control government spending, which would only worsen under Speaker Pelosi and her party’s plans for universal health care and basic income.
History also suggests there is little correlation between federal tax rates and federal revenues. For instance, Ronald Reagan cut taxes across the board and real federal income tax revenue increased by 18 percent over his term.
His tax cut ushered in several years of 4 percent economic growth, because it kept more money in the private economy where it is spent creating value, rather than shipped off to Washington where it is squandered padding budgets.
Although I have been retired from the retail industry for 15 years, I have not forgotten the importance of listening to my customers. Now it’s time for Republicans to listen to theirs. They must unite around tax cuts for the good of the country and their constituents. Otherwise, voters will unite against them next November.
Bernie Marcus is the chairman of the Marcus Foundation, the co-founder of Job Creators Network and the retired co-founder of The Home Depot.