This is a tax bill, not tax reform

On Friday night, the Republican led Senate finally managed to pass their version of a tax bill. But let’s be clear: It’s a tax bill, not tax reform, nor is it a bill that really benefits the middle and upper middle class that much.

This is a bill that wealthy globalists in private equity and hedge funds and real estate love: it benefits them to the tune of hundreds of billions while letting the middle and upper middle class enjoy the crumbs of the cake.

While the corporate tax rate needs to go down to make America’s business taxes more competitive globally, small businesses and the middle class, — especially the upper middle class — are not nearly reaping the benefits in this bill that they should be.

{mosads}Recently, Paul Ryan was trying to sell the plan as giving back $1,200 annually to the average American worker. There are some reports that put the figure at $1,500 annually, even $2,200, but you’re really looking at $100 to $180 a month, or $25 to $45 a week.

Sounds to me like a measly bribe to the voters in hopes they won’t notice the dump trucks of cash being poured into the pockets of the special interests and very wealthy.

Almost 50 percent of private sector jobs come from small businesses, and while the tax break for small businesses went from 17 percent to 23 percent thanks to the work of Sens. Ron Johnson (R-Wisc.)  and Steve Daines (R-Mont.), those cuts need to be more at the 37 percent range, as in a 25 percent rate for small businesses.

Almost every Republican politician touts his or her small business credentials on the campaign trail. When they finally have the power to do something about it, they conveniently forget all about that rhetoric.

As the plan now moves toward conference to reconcile the House and Senate versions, there are fixes that must be made: The corporate tax should be immediate, the small business tax should be set at 25 percent and the personal taxes should be set at the four bracket level.

As hard as it is for the swamp dwellers to do, they must also fully close the carried interest loophole, not accepting fig leaf of the Brady compromise on the issue. This one issue was egregious enough for Donald Trump to repeatedly mention it on the campaign trail, yet suddenly he’s gone silent on it, and trust me, the silence is deafening.

Don’t give special favors to private jet companies because nothing says “Benefiting the middle class” like carving out a little goodie for Gary Cohn and Steve Mnuchin’s buddies back on Wall St. On the issue of deducting state and local taxes (SALT), as much as I agree in principle that red states should stop funding the blue state’s egregious fiscal irresponsibility, better to sunset that deduction, as Steve Forbes has suggested, in eighteen months to two years.

Finally, the bill should be fixed to make sure it doesn’t contain any unnecessary “poison pills” that could come back to haunt the president later on.

There are already big things that the Democrats will try to hang the president on, like the Estate Tax, like the lower pass through rate (the president’s businesses are pass-throughs) and the fact that they’re giving permanent rate cuts to wealthy corporations, but only temporary rate cuts to the Middle Class. Those will be bad enough and you can be guaranteed those attacks are coming.

But what we absolutely don’t need is the perception that, while the middle class got their deductions taken away and will only get temporary rate cuts, the president and his real estate mogul buddies got additional perks, like a massive break with faster depreciation by moving commercial real estate depreciation lives from 39 years to 25 years.

The Tax Foundation estimates that alone will cost the Treasury hundreds of billions of dollars over the next twenty years. Even if you only buy the Senate’s scoring that it only costs Treasury $11 billion over ten years, do you really want those optics of a handful of wealthy billionaire real estate developers making billions more while the average middle class American is clearing $100 a month?

With real estate outpacing inflation today, the real estate developers don’t need a stimulus, so why are we giving them an additional break that could go toward helping the middle class, especially when their “temporary” tax cut runs out?

But in all this tax of “tax reform” (which again, this isn’t), none of the conversation has really touched on the 65 percent of our federal budget goes to Medicare, Medicaid, and Social Security, and other welfare and entitlement programs.

You toss in the interest payments on our national debt and we’re about at 70 percent of federal government spending. So until we get our spending under control, it feels like everything Congress is doing is a game of ring around the rosy around said elephant: always present, never touched and always expanding.

While the Democrat Party is currently a dumpster fire on steroids, Republicans need to be careful on what this final tax bill actually looks like.

What happens if none of the above fixes are made and a few months before the 2018 elections the American people wake up to realize that they got the short end of the stick on tax “reform” and that the wealthy and the hedge fund and private equity guys got all the real breaks? It won’t end well for Republicans, and quite frankly, it won’t end well for Donald Trump.

Ned Ryun is a former presidential writer for George W. Bush and the founder and CEO of American Majority. You can find him on Twitter@nedryun.