President Donald J. Trump last week promised Americans "a giant, beautiful, massive — the biggest ever in our country — tax cut." As delicious as that sounds, Trump’s tax overhaul may be tastiest for what it makes tiny, appealing, and compact — the 1040 tax return.
If Washington, D.C. Republicans manage not to botch tax reform — as they wrecked Obamacare repeal — simplification should be among the new system’s most attractive elements, along with its consolidation of seven tax rates to three — 12, 25, and 35 percent.
Letting Americans keep more of their money should energize an economy finally awakening from the slumber of the Bush-Obama years.
U.S. House Speaker Paul Ryan, R-Wis., proposes a simple post card for filing typical tax returns. Rather than the current 1040 form’s 79 lines, Ryan’s postcard contains 14. By ditching nearly every deduction, loophole, and exemption — beside the home-mortgage and charitable write-offs — there simply would be fewer lines to fill.
This should cheer Americans who struggle to machete their way through today’s tax system. The IRS’s Amazon jungle is impenetrable, menacing, and plagued by pitfalls at every turn. Last month in North Dakota, Trump called America’s tax structure "outdated, complex, and extremely burdensome." He further lamented the "billions of hours wasted on paperwork and on compliance, adding: "Our tax code is a giant self-inflicted economic wound."
According to the IRS’s latest estimates, "The average burden for taxpayers filing Form 1040 is about 15 hours and $280." Meanwhile, "business taxpayers are expected to have an average burden of about 22 hours and $430." All told, taxpayers spend some six billion hours and $195 billion on tax preparation annually. This entire enterprise is governed by the 10,928 page U.S. Tax Code, whose prose is as dense as tropical hardwood.
Trump’s answer to this mess: "Under our plan," he said, "95 percent of Americans will be able to file their tax returns on a single page without having to keep receipts, fill out schedules, or track endless paperwork."
Trump’s much-welcome simplification initiative faces two immediate speedbumps: Congressional Republicans from high-tax, left-wing states like California and New York are squirming to keep the state-and-local-tax deduction.
Dumping that loophole, however, will make Sacramento’s and Albany’s high-tax ways sting. And that would encourage such taxpayers to demand lower taxes from their governors, state lawmakers, mayors, and city councils. This would be good.
Even more worrisome, Capitol Hill Republicans reportedly are warming to a fourth tax bracket for the highest-income earners. This would be bad.
Washington Republicans have an infuriating habit of defeating Democrats at the polls and then impersonating them once in office. A fourth bracket, to ensnare the wealthy, smacks of far-left class warfare. Republicans should leave the rich-bashing to Sen. Bernie Sanders, I-Vt., a socialist.
Republicans should know — and loudly exclaim — that the top 1 percent of filers made 20.6 percent of all adjusted gross income and paid 39.5 percent of all income-tax revenue in 2014, the latest Tax Foundation data confirm. The top 10 percent earned 47.2 percent of total AGI and generated 71 percent of federal income taxes.
Democrats whine that the wealthy will enjoy the lion’s share of Trump’s tax cuts. This is logical: They pay the lion’s share of taxes. This is no more shocking than a company that pays most of its commissions to those who produce the most sales.
Republicans should encourage Americans to celebrate how this plan cuts their own taxes, not scorn those who will save more, because they pay more. Further, the ensuing, robust growth will lift the fortunes of all Americans — perhaps disproportionately those whose dim prospects brighten as the economy expands.
Trump’s plan simplifies the tax code, streamlines tax filing, and creates three tax rates, all lower than today’s 39.6 percent top tier. Congressional Republicans should stop their needless self-sabotage, scrap this Leftist fourth rate on the rich, and speed the enactment of President Trump’s giant, beautiful, massive tax cut.
Deroy Murdock is a Manhattan-based Fox News contributor and a contributing editor with National Review Online. He has been a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. Read more opinions from Deroy Murdock — Click Here Now.
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