63°F
weather icon Mostly Cloudy

Jim Hartman on the tax bill: making things a little better

President Donald Trump’s signing of the Tax Cuts and Jobs Act of 2017 was met with the overheated, partisan rhetoric of our current politics.

At a White House rally on Dec. 22 celebrating its passage, over-the-top praise was heaped on Trump by congressional Republicans.

He was lauded for “exquisite presidential leadership,” as a “man of action,” and “the president of the United States, whom I love and appreciate so much.”

Utah Senator Orrin Hatch may have set a record for fawning by declaring that Mr. Trump may be the greatest president ever. Ever? Not Washington— or Lincoln?

Not to be outdone rhetorically, Democrats launched their own fusillade of criticism directed at Trump and the tax bill. Senate Democratic leader Chuck Schumer employed the standard line used against all Republican tax cuts—that they benefit only the rich.

“There are only two places where America is popping champagne,” said Sen. Schumer, “the White House and corporate boardrooms.”

Democratic House Leader Nancy Pelosi denounced “the greed of those with power, the cruelty that is in the heart of the tax scam.”

And, California Governor Jerry Brown labeled the bill a “monstrosity” likening Republicans to “mafia thugs.”

The tax bill is not popular in the polls. A recent Wall Street Journal/NBC survey found 41 percent opposing it with only 24 percent in support. The reason: the poll reflects few people believe it will provide tax relief for middle-class families.

While it’s the most significant tax measure since the Tax Reform Act of 1986, the bipartisanship of more than 31 years ago seems unattainable today.

The 1986 tax reform was driven as much by Democrats as by President Ronald Reagan. Dick Gephardt and Dan Rostenkowski moved the bill in the House, and Bill Bradley was a leading architect in the Senate.

The bill cut the top income tax rate from 50 percent to 28 percent, consolidated 14 tax brackets down to two, removed 6 million poor Americans from the income tax rolls, eliminated tax loopholes and shifted tax burdens to corporations— while being revenue neutral.

Real test

The real test for the 2017 tax bill—setting aside the rhetoric on both sides—will it make things a little better or worse?

Since 2005, Democrats and Republicans have acknowledged the 35 percent corporate tax rate as uncompetitive. The United States has the highest top statutory corporate tax rate among the Group of 20(G20) nations, according to the Congressional Budget Office.

Beginning in 2012, President Barack Obama annually proposed a reduced 28 percent tax rate. His 2012 GOP rival, Mitt Romney, pushed for 25 percent. At times, a deal looked possible but partisanship always intervened.

As a direct result of the reduced corporate rate to 21 percent, six large corporations immediately announced plans to do more for their employees—bonuses, increases in their minimum wage, additional hiring, more business investment. The new rate offers hope of broader prosperity after a decade of slow growth and rising inequality.

The numbers

The individual tax reform essentially gives everyone a tax cut by retaining the existing seven tax brackets and trimming most of the rates by a few points.

In the end, the Tax Cuts and Jobs Act of 2017 will have tax brackets of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and a top rate of 37 percent.

Tax simplification is given a major boost with the near doubling of the standard deduction to $12,000 for singles and $24,000 for couples. The child tax credit has been doubled to $2,000 per child.

The nonpartisan Tax Foundation estimates the bill will result in an average $610 annual savings for middle-income Nevada families. A single Nevadan earning $45,000 taking the standard deduction will save $909.

A married household with two kids and combined earnings of $65,000 will save $1,825. The Tax Foundation further estimates economic gains achieved from the reduction in the corporate rate will result in the creation of an additional 3,048 Nevada jobs.

In 2018, the vast majority of Nevada workers will see a boost in their paychecks —that’s good news to celebrate.

Jim Hartman is an attorney residing in Genoa, Nevada.

Don't miss the big stories. Like us on Facebook.
THE LATEST
COVID-19 and how residents are ignoring the self-quarantine

Some residents of Nevada ignore the call for voluntarily self-quarantining and social distancing. There are still a lot of people out in the community, and traffic on the roads is still substantial. If you make a quick trip to pick up essentials at the grocery store, you will see that stores are still being overrun by shoppers madly searching for the ever-elusive rolls of toilet paper and paper towels. Head into a big box hardware store to pick up repair parts, and shoppers fill the aisles who have no idea what social distancing means. Bored at home and seeking something productive to do, homeowners have decided to occupy their free time by tackling projects around the yard and house. Signs around the stores asking shoppers to maintain social distancing are largely ignored by many as they go about their business. Yes, you will see some residents wearing surgical face masks. You will also see some wearing homemade masks of cloth or windsocks pulled up and cover their face and nose. Some shoppers, as they navigate down crowded aisles, will move to keep at least six feet between them and other shoppers. Then there are those shoppers who crowd in on top of you as stand waiting to check out without any regard to the prominently places signs asking them to stay back at least six feet. For them and for others who are not heeding the request to stay at home and for social distancing, the COVID-19 virus is not a real threat.

By the time we notice we’re hungry, it may be too late

“As the top U.S. watermelon-producing state prepares for harvest, Reuters reports, “many of the workers needed to collect the crop are stuck in Mexico …. Without the workers, crops could rot in fields throughout the country,” starting in Florida and California where major harvests begin in April and May.

It’s not the zombie apocalypse we were promised

For years we have all watched the movies and read the books about a global pandemic that would herald the end of mankind as we know it. When the virus was first reported, I was alarmed and was very glad that the president at least stopped flights from China. What happened next still puzzles me.

California Lottery

No one matched all five numbers and the mega number in the Wednesday, March 11 drawing of the California Super Lotto. The next jackpot will be at least $10 million.