Much of what the federal government does has little or no direct impact on most people’s day-to-day lives.
That’s not true, of course, for things like the military draft or its elimination, and major issues such as abortion and civil rights. But none of those appear to be on the agenda of the incoming president.
What is on the agenda for Donald Trump and Republican leaders is the repeal of the Affordable Care Act, which could affect some 20 million people profoundly and everyone else indirectly. And then there’s the No. 2 item: tax reform.
Changes to federal tax laws are all but inevitable given Republican control of the White House and Congress. What those changes might ultimately be and whether they will help or hurt America’s low-income and middle-class residents remains to be seen.
The broad outlines of the Republican plan, at least the parts on which President-elect Donald Trump and House and Senate leadership agree, have been outlined.
In short, corporate tax laws will change, perhaps dramatically, and the current seven federal income tax brackets, under the plans of both Trump and House Speaker Paul Ryan, will fall from a low of 10 percent and a high of 39.6 percent to three brackets: 12 percent, 25 percent and 33 percent. Some deductions from gross income will be reduced, others perhaps eliminated.
Most analysts believe that the changes will lower taxes for everyone overall, but the gains will be small for most and a boon for the nation’s wealthiest taxpayers.
According to the Tax Policy Center, 47 percent of the tax breaks will go to the top 1 percent of taxpayers. Single-parent families and families with lots of children, however, would pay more under the plan. The top 1 percent, with incomes of $3.7 million or more, would save $1.1 million per year. The middle of the middle class would save $1,100.
Proponents of the Republican plans say they will increase federal revenue by spurring economic activity. Critics say more tax cuts will worsen the national deficit and debt.
How should Democrats, namely New Hampshire’s two senators and two representatives, respond? First, they should insist that any plan should reduce the nation’s growing income inequality, which is a threat to democracy. Then, they should join their party in putting forward a new plan for a new era and a new economy, not Hillary Clinton’s plan.
If, as expected, Republicans use the budget reconciliation process, which is not subject to filibuster, to push through tax reform, there’s not much Democrats can do to prevent it. But they should speak loudly and clearly about the reasons for their opposition and why their plan is the better option.
The weeds of tax laws are too thick to be cut through quickly or easily. Predictions about their impact are just that – predictions. Is anyone still waiting for trickle down to trickle down?
Changes to the nation’s tax code should increase, not decrease the ability of anyone, no matter what their economic station, to pursue the American dream of rising from a lowly economic station to, if not the top 1 percent, at least to a comfortable middle-class life.