Opinions by Jack: The Republican Tax Bill Explained, Maybe

I don’t think I fully understand the upcoming Republican Tax Reform Bill and resulting Republican budget strategy. I know members of the Republican House and Senate don’t fully understand it either because they all say that they haven’t read the thing. I can’t even think in terms of the trillions of dollars involved. I thought I would try to understand the basics by way of an analogy, a parable if you will.

Consider the Joneses, a family of eleven with a husband, wife, and nine children. This family represents all of America. They own their own home but have a first and second mortgage which, when combined, exceed the appraised value of the home. Their credit cards are all maxed out. The husband, the sole wage earner, has an income of $100,000. After making the two mortgage payments, minimum credit card payments, buying food, and paying utility and medical bills, there is nothing left at the end of the month.

The Joneses

This family takes its security seriously so they have a sophisticated alarm system, video surveillance, a perimeter fence, and they own over 200 semi-automatic rifles and 100 cases of ammunition. This arsenal represents more firepower than all of their neighbors combined. This year they plan to spend an additional $16,000 to purchase more weapons. Since his credit cards are maxed, Mr. Jones plans to borrow this amount from the Bank of Xi Jinping.

The Joneses Take Security Seriously

The Jones’ house is in need of repairs and the electrical supply lines to the property need to be upgraded as there are regular power outages. The road into the Jones property is full of potholes. There is a small bridge across a ditch that is part of this main driveway entrance and that bridge is in danger of collapse after years of neglect. The water supply to the house leaks and the sewer system constantly overflows into the yard. These repairs will be postponed while Mr. Jones plans to put $10,000 into fixing the holes in their fence so his neighbors can’t sneak in. It is not immediately obvious why the fence needs to be fixed since most of his neighbors currently just come in through the main driveway and front walkway. Mr. Jones will again borrow this money from the Bank of Xi Jinping.

Mr. Jones gives his wife and nine children an allowance. This year he plans to give his wife and eight of his kids a $1.00 a week raise in this allowance. The last child, Donald, his favorite, will get a $500 a week raise. Donald is the rich family member and spends his allowance on the finer things. Mr. Jones had hoped that Donald would spend some of his allowance helping out other family members but, since Donald was born, this money has never trickled down to the others. Mr. Jones hopes that, by giving Donald this extra $500 a week, his attitude will change. It never has before but Mr. Jones is, above all things, an optimist (and a Republican). These allowance raises will cost Mr. Jones $26,468 that he will borrow from the Bank of Xi Jinping.

Trickle Down Economics

Mr. Jones isn’t really worried about all of this. He knows he can stop paying his health insurance to save some money. If someone in the family gets sick they can always go to the local emergency room. He also knows that he is getting along in years and has been regularly drinking from a polluted water supply and breathing the air from the nearby coal fired electrical plant. He certainly hopes he doesn't have to rely on Medicare and Social Security since those programs will certainly have to be curtailed. His wife and kids will inherit all of this debt when he dies. Even Donald will suffer because he hasn’t saved a dime.

If the Jones family sounds like it is living on borrowed time, just consider what the new tax bill and our current spending priorities sound like. We owe about 2.4 trillion dollars to China and Japan. We owe another 2.6 trillion dollars to other countries. We also owe 5 trillion dollars to ourselves. I guess this last figure is what happens when you own the printing press and can just make more dollars.

We currently owe more than the annual total Gross Domestic Product;
and we just gave everybody a raise (lowered taxes)

The Republican Party claims to be the party of fiscal responsibility but has just managed to plunge us deeper in debt. Yes, I will personally pay less in taxes next year because of this tax cut. Most salaried Americans will see lower withholding taxes and, as a consequence, receive a bigger paycheck. Wealthy Americans, the .01% ers, by most accounts, will be able to afford an even bigger yacht.

While most Americans are today listening to the news and don't like the new tax bill, when they see a small boost in their paychecks in 2018, they will probably forget the disparity. If we in the lower 99 percentile forget the beating we were handed in 2017, the 2018 mid-term elections will probably favor the Republicans. To quote Sonny and Cher, "The beat goes on."

Sonny & Cher, The Beat Goes On

Food for thought. According to the non-partisan Tax Policy Center:

The average break (from the new tax bill) would be about $1,600 in 2018, but the biggest break, calculated as a share of after-income tax, would go to those families making between $308,000 and $733,000. For middle-income people, their tax savings, an extra $900, would pay for about seven months of gas. By contrast, those in the top one percent could pick up a nice Mercedes C Class Coupe with their $50,000+ average tax cut.