For Tax Reform Lessons, Congress Needn’t Look Far

This is the Republican’s Gruber moment. They know that by eliminating deductions millions in the upper middle class will end up paying higher taxes. These taxpayers won’t know this until after the first filing year. Remember when we were all supposed to get a $2,500 cut in our health insurance from obamacare?

For decades the overriding philosophy for the purpose of corporate taxation could be described with a subtle phrase: "Either pay it to Uncle Sam, or reinvest it in the economy". Then came Reaganomics. The philosophy changed from "Either pay it to Uncle Sam, reinvest it in the economy, or go ahead and keep it. The government trusts you to make the economy grow since you are such brilliant businessmen". Believe it or not, the businessmen just kept the money and did not use it to make the economy grow! It's like they're just greedy or something. Baffling.

Trump is not interested in tax reform. He's only interested in lowering his own tax bill, hence his attacks on the AMT and the inheritance tax.

The theory is that tax cuts generate growth, which they utterly failed to do in Kansas (admittedly a textbook case for what not to do). However, in a place as small as DC, sitting in the middle of an economic powerhouse where there's a decent amount of turnover of the well-paid every 2 to 4 years, they could get significant revenue growth from merely getting more well-paid individuals to move to DC instead of VA or MD.

We need to fix our tax code and it's encouraging that DC didn't lose revenue, but the US is not going to get its growth through poaching people from Canada and isn't enthusiastic about the Mexicans eager to contribute to the economy.

Sounds good, except I think rates should be lowered for anyone earning under $250,000, not $1,000,000. Let the tax rates on those earning over $250,000 remain at 39% and use the money to pay down debt and improve infrastructure.

We may have the lowest "general sales tax" in the area, but don't forget the special sales and consumption taxes. The District still charges 10% sales tax for restaurants where the food is consumed on site. Many restaurants still charge that t if you get takeout. And the hotel tax. Don't forget all the taxes that our visitors pay

We may have the lowest "general sales tax" in the area, but don't forget the special sales and consumption taxes. The District still charges 10% sales tax for restaurants where the food is consumed on site. Many restaurants still charged him present if you get takeout. And the hotel tax.

Trickle down has never worked. Didn't work with Reagan, didn't work with Bush II. After Reagan, Clinton came in and raised taxes slightly for high income and it seemed to work.

The DC-Trumpist comparison is not exactly apples to apples. In the description about DC, everyone seemed to work together to achieve something equitable although that still remains to be seen since it is proven that lower taxes don't stimulate anything except rich people having more money.

In the case of the Trumpists, just look at his economic posse, Cohn and Mnuchin. Both interested in promulgating the trickle down in a dishonest way because trickle down DOESN'T WORK!

Nothing Trump has announced has actually happened, except the pardon. What isn't talked about--destroying the regulatory state--is happening, just not being discussed.

I don't think increasing VAT or sales tax is the answer as that overwhelmingly impacts lower income people. Corporations and individuals should pay a fair share in taxes and government at every level needs to be competent enough to use those resources for the betterment of all.

Taxing to support the national security state at the expense of social programs does not make a strong or a safe country. High speed rail and safe bridges and roads do! Go figure. Revenue works when revenue is used. WPA please!

Please start reporting the deception practiced by this "administration" that benefits those who already have much and ignores those who have little.

The buried lead here is an accounting of the means by which individuals within DC's city council managed to sell their tax reforms. Needless to say, a return at their level to a broader-based tax regime that the entire nation had until about 1980 must have gone against the grain of basic convictions there. That had to have been an inspired effort, and it's not just the results we should be studying but the means and the exceptional individuals who pulled it off.

Some credit is given to individuals and to generalized means, such as a "willingness to compromise". But an analysis of the detailed means and how individuals applied them to achieve the results could serve as a guide to Kansas and others that need it.

Key takeaways:
Already running a surplus. Broadened the tax base and eliminated loop holes. Became competitive with neighboring state matching their business tax rate.
All very reasonable.

Fed's issue:
We are running a deficit approaching 100 percent of GDP. We have narrowed the tax base (corporations paid between 50 percent and 70 percent of America's total federal tax bite in the 1950's, and we quickly paid off a deficit equal to 129 percent of GDP), and now all businesses provide is only about 10 percent of revenues collected. This is because there are so many loopholes that 25 percent of The Fortune 100 companies pay no federal taxes (many have credits for years to come), and The Fortune 1000 pays less than 8 percent. Unreasonable, and the Trump/GOP plan takes it to the point of malfeasance.

Want to expand the tax base? Tax corporations the same way we tax individuals.

Individuals are liable for US income tax for all money that they earn overseas whether they bring their money home or not, (though we give them a foreign tax credit which wipes out much of the US income tax) .

Presently US corporations do not pay income tax on their overseas earnings until they bring their money home. Going forward let's deem as US taxable income all money earned by US corporations and their phony-baloney foreign subsidiaries and tax it. At the same time we should reduce the corporate tax rate to about 15%.

Do that and we will reduce US corporate tax inversions plus foreign corporations in high-tax jurisdictions will move here instead of Ireland, Luxembourg and the Caribbean.

How much of the growth was from federal government? Health care?

Have a hard time seeing local tax reform as the giant shot of adrenaline portrayed here. Local taxes just not that big in overall scheme of things....

Republicans float the "tax breaks scam" every time one of them gets into office. You'd think that by now they'd know that we know that its always been a bribe. And the scam part of it has always been how they make the wealthy wealthier while advertising that they're giving us all a tax break. A couple bucks for the little people, some hundred thousand for millionaires. Telling us that our businesses can't compete because they're over taxed too is an obfuscation when its the bonuses and pay that prevent US businesses from being competitive which is always kept out of the explanation. The most shameful part about it is that they keep working that same scam for decades and we never learn from history. Lets spend more on the military, wall and infrastructure because we have all the money in the world. Some of us don't, some do. Republican operatives not representatives.

I never would have thought that a place existed that had taxes higher than New York State, but - surprise! - D.C. taxes capital gains at 30%. No wonder people are willing to commute.

do you really want to encourage the politicians decades old mantra that lowering taxes increases revenue? As usual, they will run over us with the tax cuts and ignore the tax reform. this is a poorly conceived and sloppily executed article when we - your readers - need and cry out for a well conceived and finely honed analysis of the alternatives. You, the Times, are not living up to your responsibilities. You are letting us down.

Hey about a steeply progressive wealth tax ? As in getting very steep above a net worth of, say approximately $500 million and maxing out in the single digit range. Because, I mean, who really NEEDS more than $500 million, particularly with so many people starving. And please don't tell me that it would be bad for the country because the people with the billions (and thus control) have done such a great job with the country the last 30 years.

True tax reform requires leadership with the political courage to stand up to opposition from the public, special interests and from within their own ranks in pursuit of a greater good. Even if the republican house or senate leadership had what it takes (which is doubtful) Trump has already shown that he will undercut them as soon as any aspect of the plan becomes political unpopular or inconvenient to him or his friends.

This is going nowhere.

Fairness is in the eye of the beholder. Deductions that wealthy business executives favor may not seem fair to a family of 4 owning a home with a mortgage, paying for child care and contributing to their local church.

Mr. Mendelson's statement that "Republicans might need to sacrifice ideological purity in pursuit of a common goal" is fine but voters need to know what the common goal is and whose interest we are considering. It is all about what the tax rates are and most importantly what deductions will be allowed.

Even more importantly where will cuts be made to pay for the tax cuts that have been promised?

Mr. Stewart seems well-meaning, but he has fallen prey to the common misconception that our federal government, like a household or state/city government, can only spend what it takes in as revenue. Currency issuers and currency users are completely different animals, and any comparison needs to begin with understanding their relationship. Federal tax policy should not emulate what is legally necessary for states and municipalities.

The deficit is not the issue most commentators believe it is. In fact, the national deficit mirrors funds available within the private sector, acting to stimulate the economy.

Persons unfamiliar with Modern Monetary Theory would to well to revisit their understanding of macroeconomics before prescribing fixes to the current system. Stephanie Kelton, is Professor of Economics at the University of Missouri-Kansas City, and has written extensively about the importance of using the full ability of a currency issuer to meet the needs of a modern society. She, along with a number of other economists, have debunked many of the myths current columnists and politicians still hold to.

For a brief introduction to Dr. Kelton's work, start with this brief video clip: https://www.youtube.com/watch?v=TDL4c8fMODk&t=8s

Why even bother writing this, really? National Republicans have no interest in reviving small businesses, they have no interest in creating jobs, certainly not in being seen as fair and reasonable. They have one goal and one goal only: to lower taxes on people like President Trump. This has been the Republican mantra since 1980.

Trying to attribute logic of any sort to Republican tax plans is folly. Everyone knows the law of supply-and-demand. Yet Republicans argue the reverse for tax policy. They do it for one reason, and that reason is obvious.

Like health care, "taxes are much more complicated than I thought," will say our over weight , draft dodging, criminal leader. Don't expect any real help from the white house.

DEMOCRATS: STONEWALL TAX REFORM UNTIL GOP RECOGNIZES CLIMATE CHANGE

I think the political calculus is replicable. Find a leader willing to take the political heat, and everyone else can get behind them. Find a bipartisan majority mostly made of the majority party, but do not try to go it alone.

On policy, there is something to be said for everyone getting something. Conservatives got lower rates and lower overall tax burden, liberals got most of the burden applied to lower and middle-income people and households. Everyone got a simpler code. I'd be game for a tax cut that shifted the proportion of the overall burden upward.

But there are huge differences. One, already-affluent urban zones are largely thriving in this country, there is a demographic tide that is lifting a lot of America's largest cities. D.C. would have benefited from that economically even without tax reform. Not so much Kansas, or Mississippi, or Southern Illinois, or Northern Michigan...

Second, D.C. government isn't $20 trillion in debt. We need revenue increases, coming from the top 0.01%, as well as modest cuts, mostly to, yes, Social Security and Medicare, while making additional spending on infrastructure, apprenticeships, and National Parks. These investments will stimulate growth. We need deficit reduction, mostly achieved through increased revenues, and we need it soon.

"For inspiration, maybe Mr. Trump and lawmakers in Congress should look in their own backyard.

The District of Columbia, a political entity whose city council lies ideologically somewhere to the left of Bernie Sanders, has done exactly that."

This is poorly written and counterfactual. To the left of Bernie Sanders? Does DC have a universal basic income (aside from the de facto guaranteed income on K Street for former Congresspersons)? Medicare for All? How exactly does that sentence get by an editor, then?

"Broadening the base" means increasing the amount of income subject to tax. That can be done by reducing what items are exempt from tax, and/or by reducing what costs are deductible. Any serious reform of the Internal Revenue Code would do both, just as the 1986 tax reform did. That should also reduce the complexity of the tax code, which everyone from Bernie Sanders to Ted Cruz agrees should be done.

900 million gap in Kansas (not billion). The whole budget is less than 16 billion.

We would be much, MUCH better off if Phil Mendelson were President instead of Donald Trump. Phil Mendelson led the charge to cut taxes in DC overall, and to broaden the base and remove loopholes and reduce rates significantly for everyone earning less than $1 million. Trump wants more loopholes for the rich and his plan barely affects the middle class. Granted, the federal tax code is a much bigger problem than the DC tax code, but who would you rather have in charge of it: someone like Mendelson who has demonstrated success at the local level, or a corrupt failure like Trump?

I agree that this is a silly comparison if you consider the politics of federal tax reform - lobbyist assualt the Capitol daily to argue for huge tax breaks for their paymasters. That occurs across the ideological spectrum.

Still, from a strategic standpoint, the DC example has merit.
Most readers will not understand what "broadening the base" means. It simply means more entities (taxpayers at all level of income and of all types) are paying tax. For example, rather than 50,000 residents of a city paying taxes out of a total of 500,000, the whole city will pay taxes. But here is the attractive part - rates can be lower. For politcians in Congress, that works well because both parties can honestly say that they won.

Still, in this toxic political environment where we have spineless leadership in the house and senate and maniac in the oval office, I am not hopeful. For reform to work, Ryan and McConnell would have to want to "do the right thing." We just haven't seen them do that. For example, they would have to stop subidizing Big Oil and close loopholes.

But Tax Reform can be done and eventually it will be done because we can't continue on the same path. If they are truly willing to simplify the tax code, it can be done.

There is not enough information about the D.C. reform to judge whether or not it is applicable to the federal code or to make a case that the tax changes are the reason for the growth in revenue. I notice that Mr. Mendelson brags about having the lowest "general sales tax" in the region, which may cover the fact that there are additional special purpose sales taxes like we have in Georgia. These "local option" sales taxes, approved by county voters, are favorites of local governments to avoid raising property taxes for necessary capital improvements to infrastructure as well as "extras" like convention centers, sports stadiums, speculative industrial parks, and golf courses. Obviously, sales taxes hit the lowest income residents along with the rest.

Reading through the article, I kept feeling something is not right with the data and arguments posted. For example it lists various organizations whose tax views are not very clear to me i.e. pro-tax cut, etc. Secondly it never gave data on what the tax rates were before, now and which loopholes (excepting fitness centers) were closed. All in all, this looked more like a marketing sheet than an article on a data point that is worth looking into more deeply to learn any lessons it teaches

Just try not to put sales tax on absolute necessities like food. Those fall disproportionately on poor and lower middle class people.

"To raise revenue, the plan extended the sales tax to service businesses, which swept tanning salons and fitness centers into the tax base."

Is this what they mean by broadening the tax base? If so, on the the national level they could include financial transactions where a small sales tax is charged to each stock purchase/sale. And to lawyers fees if they don't already have to pay a sales tax.

Would be interesting to know how much extra revenue just those two would bring in.

Yes, tax the churches. They will give an honest account of their income, right?

Common Sense would tell us that the Kansas budget deficit cannot possibly be $900 billion.

You might think about having someone who knows something about money, taxes and politics read articles like this one BEFORE they run.

Tax the churches.

Silly comparison. How can you write and print such as thing.

What does federal taxes have to do with property taxes and the incredible value of real estate in DC. NOTHING. Nor sales tax.

Nowhere near Apples to Oranges.

Stick the the federal tax code not including things that are state and local in all other jurisidctions.

I believe that the correct figure, regarding the Kansas budget gap is $900 million, not billion. A factor of a thousand times.