By Tommy Wagner
Tax reform is an important step to make the United States more competitive and strong for future generations, but it must be accomplished in a fiscally responsible way. Having lived through the 2008 financial crisis, we millennials are acutely aware of our financial needs and our future. The current tax plan being rushed through Congress, however, has us asking the question: does this plan actually benefit us?
The Senate and House have about two weeks left to complete work on a tax bill. During this time, both chambers will have to enter into the reconciliation process to bridge the differences in both plans before they send it to the President’s desk. The speed at which both the Senate and House have rushed their tax plans is unprecedented, and it appears that they’re only interested in scoring a political win instead of a win for American taxpayers and the economy.
For generations, the Republican Party has rightly been the party of fiscal responsibility. The Senate and House tax reform proposals, however, do not show a Republican Party standing up for the country’s financial integrity. Non-partisan analyses of both chambers’ tax bills show that they will add $1.5 trillion to the federal deficit over ten years and explode the country’s already unsustainable debt, which stands at over $20 trillion. This is unacceptable and hypocritical. We cannot afford to continue increasing our national debt with no plan to pay it down or rein in wasteful government spending.
In addition to the plans’ negative impacts on the deficit and debt, the legislation will also cripple the middle class – the most important economic and political bloc in the country – by taking an ax to the state and local tax (SALT) deduction. The SALT deduction is a non-partisan, hundred-year-old tax provision that 44 million Americans nationwide currently use. If this deduction goes away, whether partially or fully, American taxpayers will see their taxes increase significantly by way of double-taxation – including millions of Virginians.
In Virginia alone, 1.5 million households filed for the SALT deduction in 2015, which led to nearly $16.5 billion in savings. On average, this meant a deduction of $11,288 from their tax bills, of which 84.4 percent of these benefits went to middle-income Americans according to an analysis from the National Association of Counties. Under the current tax reform plans, the SALT deduction would largely go away for individual taxpayers and American families. What’s more, in the Senate’s tax bill, individual tax breaks would expire after 2025 while tax breaks for businesses are permanent. It is crucial to promote a business-friendly tax environment to grow the economy, but it must be done in a balanced way.
Congressional Republicans have the right idea in so far as they seek to overhaul the cumbersome U.S. tax code to promote economic growth and cut taxes on American citizens. Unfortunately, they’ve missed the mark in an attempt to rush through legislation that will serve as a political talking point for the 2018 midterm elections. Congress needs to go back to the drawing board and hash out a tax plan that truly helps American taxpayers, businesses, and the wider economy. As it stands today, these tax proposals will only hurt our financial wellbeing.