I’m so glad to see the tax bill. This appears to be the final version. I was at a meeting with our auditors (a Big 4 firm) last week and got to hear from their chief economist, a tax partner and a former U.S. Representative. They had similar takes on how this will play out. Here are my thoughts as a finance executive / CPA who has spent a “little” time on analyses that determined what country would build certain products.
The best thing is the corporate rate reduction from 35% to 21%. I wish it would have been 20%, even just for optics, but the improvement is huge. I know that alone will bring a lot of jobs back to the U.S. It is so simple that even Leftists should understand it – but either won’t, because they fail at basic economics, or will understand it but will lie about it because they know it will help minorities and the poor.
Here’s an example: Assume that you live near the border of two states and you are going to open a manufacturing plant, and all other things are equal (e.g., labor market, accessibility, etc.) except that one state has a tax rate of 35% and the other a rate of 21%. Guess where even a Leftist will build his plant? (There is a reason that people like John Kerry put their yachts in one state versus another, why people in North Carolina living near the border of South Carolina drive a few extra miles to buy gas, etc.).
Now simply expand that to countries. You are much more likely to build in the U.S. now because of the lower rate. That means more jobs for minorities / the poor. And those people will pay taxes instead of collecting unemployment and welfare. We’ll get a big double benefit.
Other stuff, all of which the Left will hate because it will actually help the U.S.:
- It repeals the Individual Mandate of Obamacare! I would have preferred a full repeal, but it is a big accomplishment and the Republicans can campaign on fulfilling part of their promise.
- The marginal rates are down a bit across the board, which should help everyone.
- The cap on state and local deductions will cost me and I don’t like the idea of having to pay federal taxes on the same income I used to pay state and local taxes. But that might put downward pressure on home prices in, say, California (shouldn’t Leftists like that?) and might make the state and local taxes hard to foist on people.
- The Left should like the limitation on the deduction of mortgage interest, but Senator Diane Feinstein was already grumbling about it. Uh, what happened to their desire to soak the rich? At least it only applies to new mortgages.
- Estate taxes should have gone to zero. They are ghoulish. What fool would want the government to profit when you die? Oh, right, the ones who favor estate taxes tend to be the people who profit when families are forced to sell businesses (e.g., Warren Buffet, who isn’t as generous as he makes himself out to be) and those who covet the success and wealth of others.
- While the tax code will still be too complicated, it will definitely be simpler for countless people. That’s a huge win.
- Congress will have less money to pay off their sexual assault victims.
- And for dessert, consider how much this will hurt the Democrats. Not one of them will have voted for it, yet it will have a dramatic positive impact on the country. So many new jobs! More after-tax pay for countless people! And all thanks to Donald Trump and the Republicans. Just think of how much mileage he’ll get from pointing out how many minorities got jobs!