Trump’s Tax Plan: A Convoluted Mess

Nelson Hultberg

October 19, 2017

“Simplify, simplify, simplify! I say, let your affairs be as two or three, and not a hundred or a thousand,” wrote Henry David Thoreau in his great classic, Walden in 1859.

If only we of the modern day could restore some of Thoreau’s wisdom to our lives and our tax system. The convoluted monster that stands for our tax code today both permeates and suffocates practically every decision we make in the political-economic arenas of life.

When we Americans went to the polls last November 8th, we sent a resounding message to the hated Washington establishment. We wanted a restoration of sanity and freedom to our lives. We wanted a rebirth of Americanism. We voted for a man who said he would “make America great again.”

It has now been almost a year since that dramatic Trumpian victory over the repugnant Hilldebeast and her mega-state cronyism. What has this past year brought us? Have our GOP solons risen to challenge the crises facing the country and boldly carve out new legislation that will create more sanity and freedom for us? Unfortunately, no.”

Our GOP solons are eagerly doing what they have always done – wallowing in the muck of self-aggrandizement, riding around in black limousines, dissembling, conspiring, obstructing, suppressing, and generally conjuring up ways to make life for Americans less prosperous and happy. This is the nature of compromisers with tyrants, and that is what the GOP is – an obtuse gathering of compromisers.

Tax Reform, Not Tax Cuts

There is no issue more important to America today than TAX REFORM, which doesn’t mean nipping and tucking with modest tax cuts, but full dramatic reformation of the gargantuan idiocy that comprises the U.S. tax code.

On September 27th, the Trump administration, released its tax reform plan, titled the Unified Tax Reform Framework. It will, as promised, cut income tax rates. It will reduce the current seven tax brackets to three. It will lower the 15% bracket to 12% and reduce the middle rate of 28% to 25%, while paring the top bracket of 39.6% down to 35%. Corporate rates are lowered from 35% to 20%.

But three brackets and a decent corporate rate are not enough. Thoreau is not amused, for there is neither “simplicity” nor “sanity” to be found in the Unified Tax Reform Framework. It is just more of the convoluted briar patch ugliness that has been stultifying our lives for over 80 years since FDR came to visit us and usher in his harebrained New Deal bureaucracies.

The Trumpian tax sages have put forth a plan that: 1) eliminates the deduction for state and local taxes, 2) ends personal exemptions for dependents, 3) doubles the standard deduction for everyone, 4) keeps the inheritance tax for capital gains, 5) dumps the estate tax, 6) scraps the Alternative Minimum Tax, and 6) abolishes the deduction of interest expenses for C corporations.

This is an unsightly mess of policy changes that cannot, of themselves, bring us true justice and legitimacy because they don’t address the real problem confronting us — progressivity of rates that allows government to confiscate wealth and manipulate society when it should be just receiving revenue simply and fairly via a system that does not convey privileges to anyone.

The major flaw in the Trump Tax Plan is that it is not truly revolutionary. It merely pays lip service to radical change, while mealy-mouthing around with support for the same illegitimate privileges that have been destroying the country for over 80 years. It merely rearranges the deck chairs on the Titanic.

What is so needed today is REAL tax reform, not pusillanimous business as usual. What is needed is what we at AFR are launching — repeal of “progressive tax rates” in America backed by an Amendment to the Constitution because this is the only way to actually end the income tax and restore sanity and freedom to our political system. Here is a brief outline of why we must bring this about and how to do so:

Presenting the 28th Amendment 

In 1848 Karl Marx wrote The Communist Manifesto advocating a heavy “progressive income tax” as the means to destroy freedom and capitalism. By 1913 his tyrannical philosophy had reached America and resulted in passage of the 16th Amendment to our Constitution. It was the beginning of the end of the American republic. Bolstered by this huge taxing power, the federal government has been able to grow into the Godzilla monster that dominates our lives today.

But thankfully millions of Americans now wish to do away with progressive tax rates. The 2014 Reason-Rupe poll showed that 62% of Americans favor a “flat tax,” or what we at AFR term an “equal-rate tax.” Such rate-equality needs to be enacted permanently, which will require the 28th Amendment to the Constitution.

To launch this cause successfully, AFR is joining forces with Joseph Farah of World Net Daily WND.com to help promote it. He runs one of the most influential websites in the conservative movement today with 4 million “unique visitors” every month. His organization in Washington, D.C. will provide personal endorsements from himself, banner ads, promotional videos, media interviews, stories in WND, and email dispatches to his 400,000 strong subscriber list. This will give AFR and the 28th Amendment big league exposure to the American people. Once a sufficient amount of publicity has been achieved, the rest is only a matter of time; the word will spread.

AFR’s 28th Amendment plan will end the primary source of government growth, which is “progressive tax rates” and their redistribution of wealth. Here is the wording for the amendment:

In order to rid America of this tyrannical tax we must first gain an understanding of what is called, in economic terminology, “infinite demand.”

The dictatorial powers developing in Washington today have come about because 50% of American citizens now possess “infinite demand” for government spending. Understanding this concept of “infinite demand” is crucial. It is the kerosene hose that fuels the fire of government growth. Until we eliminate it from our political system we have no chance to stop the destruction of America. Let me explain.

As we see in the chart displayed here from Congress’ Joint Committee on Taxation, 49% of the nation’s income earners pay 100% of federal income taxes, while 51% of income earners pay zero taxes because of the vast array of exemptions and special breaks that our politicians have written into law. Herein lies the source of “infinite demand.”

For example, a progressive income tax with arbitrary exemptions spawns a “something for nothing” voter mindset that dominates all elections. When large groups of voters are allowed to pay nothing in taxes, an irresponsible electorate will inevitably evolve to demand a steady expansion of government services. This is basic human nature and one of the cardinal laws of economics. If government benefits are free, demand for them will be infinite. Consequently, in every election there is approximately a 50% base of voters who always favor those politicians who propose increased government spending.

A very important point to understand is that the zero payers are drawn not just from the low income sector of society, but also from high income earners. Many wealthy individuals are able to hire expensive accountants to use complex tax loopholes in our present system to reduce their taxes to zero every year.

Overcoming these zero payers and their “infinite demand” for government spending will be impossible until we genuinely reform the tax system and eliminate its “something for nothing” aspect.

The 28th Amendment will bring about such reform.  It will create “equal rights under the law” for our tax code. Equal rights mandate equal rates. Equal rights are the fundamental cornerstone of America, and why the Goddess of Justice wears a blindfold. She must be impartial to all citizens, which means she cannot provide special breaks, loopholes, deductions, and rate progressivity. This will necessitate the adoption of a simple
15% equal-rate income tax that ends the use of selective favors and exemptions granted to “preferred” factions of our society.

Here is where the Trump Plan fails like all other tax plans of the past. It ends deductions and exemptions arbitrarily when they should all be ended across the board except for the standard deduction of $6,350. Only by wiping the slate completely clean can we restore justice and sanity to our tax code and prohibit the egregious seeking of favors by the hordes of lobbyists who converge on Washington every year like vermin to the grist mill in search of special privileges for their clients. (“Simplify, simplify, simplify.”).

Under the AFR “equal-rate plan” the standard deduction would remain at $6,350, which is set annually at whatever the poverty level is. It would remain because no government in good conscience should ever tax citizens’ income below the poverty level, and also because it is equal and granted to everyone. Exemptions and deductions, that are unequal or not conveyed to everyone, should not be permissible under America’s guiding legal principle of equal rights. And they would certainly not be permissible in any tax code enacted after ratification of the 28th Amendment. Section 2 of the Amendment mandates this.

Such a 15% equal-rate tax would mean that the millionaire (after taking his standard deduction of $6,350) would have to write a check for $149,048 dollars. He would not be able to use expensive accountants and loopholes to reduce his bill to zero.

Likewise the man who earns $10,000 (after taking his $6,350 deduction ) would have to write a check for $548 dollars. He would not be able to use egalitarian sophistry and progressive tax rates to reduce his bill to zero.

This would lower the present “zero-taxpayer group” (explained in the chart above) from 51% of the voters to 20%, which would give us a responsible electorate instead of today’s heedless travesty. Since 80% of the voters would then have to pay for all government subsidies and pork barrel programs proportionately out of their own pockets, they would lose their overwhelming desire for such subsidies and programs. They would begin to favor politicians who advocate “reduction” of government instead of its “constant expansion” because this is the only way they could get their own taxes reduced and more freedom into their lives.

All kinds of Ron Pauls would begin to appear in congressional elections every two years because the voters who were previously paying zero taxes would now demand it. They would not be willing to pay 15% of their income for the egregious waste that comprises modern day Washington.

Liberals’ Objection

The major objection that liberals make to equal-rate taxation is that it will place an intolerable burden on low-income earners who pay minimal taxes. But this is simply not true. It will NOT impose a net burden on them at all. In fact it will do just the opposite.

Here’s why. Because of its huge simplification of our tax code, an equal-rate tax will save American industry billions of dollars annually in compliance costs. This will greatly lower the costs of goods and services for all citizens, which naturally will make everyone better off.

An equal-rate tax will also restore the annual growth of “real wages”, which will increase the earnings of all working men and women throughout the country. This is something we haven’t had in 45 years – “real wage growth” on an annual basis. All told this revolutionary tax will bring about a 5-6% yearly increase in the standard of living for everyone.

It’s not possible to explain all the details of this here, but AFR has published an expanded version of this essay that explains the reasons thoroughly in layman’s language. See: http://afr.org/pdfs/EndIncomeTax.pdf , pp. 5-8.

To sum all this up, an equal-rate income tax will light up the sky of economic productivity in this country. Everyone (rich, poor, and in between) will receive a higher standard of living with this much needed reform. Moreover, everyone’s lives will be so much simpler. Our monstrous tax code could be reduced from 17,000 pages to two or three pages. America’s relentless march toward ever-bigger government would be ended.

It’s very important to understand – This is is not just an immensely practical cause that is needed for the country; it is also a profoundly moral cause. Think back to the 1840s and 1850s when the northern abolitionists were fighting against slavery. Their leaders took a vehement moral stand on the principle of EQUAL RIGHTS UNDER THE LAW. They proclaimed that black people had the same right to their freedom as white people, which is what carried the day and won the cause of freedom for them.

Well, that same principle exists today in the tax arena. Productive people have the same right to their income as less productive people do. We are all supposed to be equal under the law in America. We who are productive are no different than those who are less productive. Progressive tax rates are unjust, unconstitutional, and immoral.

Radical tax reform is the great unifying cause that can break the stranglehold collectivism has over our country’s politics. Americans are ready to scrap the income tax. Yet this monumental reform will not happen unless conservatives, libertarians and independents unify behind the first crucial step, which is ending “progressive tax rates” by means of a 28th Amendment to the U.S. Constitution.

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