Biblical and Constitutional Politics
Democrat and Media Lies About the Republican Tax Plan
By Gary F. Zeolla
With the leadership of President Donald Trump, the Republican-controlled Congress passed a tax bill on December 19, 2017. President Trump then signed it into law three days later. However, most polls show most Americans are opposed to the tax plan, with approval for it being as low as 26%. That is because Americans have been lied to often and repeatedly about what the Republican tax plan contains and the effects it will have. In this article, I will expose these lies and try to explain the truth about the tax law.
The long-standing Democrat talking point about Republicans is that they are “for the rich and against the middle class.” That talking point is brought out on just about any issue it can remotely fit into without any concern for the truth of the matter. The Democrats were saying it about the Republican tax plan back in the summer of 2017, long before the tax bill was even written.
For instance, Maria Bartiromo is one of the economic experts on Fox Business Network (FBN). She was making a guest appearance on the morning show on Fox News Channel (FNC) back in the summer. When she was told that Democrats and the mainstream media were saying the proposed bill would only benefit the rich, while raising taxes on the middle class, she said flat out that such claims were just lies and talking points by people who had never read what was being proposed. And she was very correct in her observation. And that still holds true to this day. Neither the media nor the Democrats seem to have actually read the law, so they keep repeating that long-standing lie as if it were still applicable.
The other lie they tell you is “trickle down doesn’t work.” For those who don’t know, “trickle down” is a somewhat derogatory way of referring to the conservative idea that lower taxes across the board will lead to a more robust economy, and that more robust economy will benefit all people. Or to quote President John F. Kennedy (JFK), “A rising tide lifts all ships.”
I am quoting JFK, as he was the first President to put forth this conservative economic principle when he lowered the tax rates considerably. As a result, the economy boomed in the 1960s, while revenues to the government increased, yes increased. The reason why government revenues increase when taxes are lowered is that though the government is getting a lower percentage of people’s wages, since those wages go up, then that lower percentage is based on a higher starting point, and that overcompensates for the lower rate.
That increase in tax revenues is seen every time taxes are lowered. It was seen when JFK lowered taxes. It was seen when Ronald Reagan lowered taxes. It was seen when George W. Bush lowered taxes. But Democrats and the media will deny this by saying the national deficit and debt went up during those times, so the lowered taxes did not bring in more revenues. But the reason the deficit and debt went up was because spending went up at a greater rate than the increase of revenues. For instance, under Reagan, tax revenues almost doubled, while spending quadrupled, hence why the debt tripled.
The next lie of Democrats and the media is that corporations pay taxes. Now, there is a corporate tax, but corporations are made up of people; they are not self-existing non-personal entities. They are also not evil. They are the means by which goods and services are produced and people make money in a capitalistic society. And that economic model works better than any other.
It is out of the scope of this article to pursue that last line; but here, it will be said, since corporations are the engine that drive a capitalistic economy, anything that benefits them benefits people since corporations are people. Therefore, tax breaks to corporations are tax breaks to real people. And it is not just “the rich” but anyone who works for a corporation or who holds stocks or bonds in a corporation who benefit.
Moreover, corporations do not pay corporate taxes out of their profits. The money for the taxes come by way of the prices set for the goods and services they produce. When taxes are high, they charge more; when taxes are low, they charge less. In addition, when taxes are high, salaries of their employees are lower; when taxes are low, salaries of employees are higher. But again, liberals and the media will lie about this affect of corporate taxation.
For instance, KDKA radio is the world’s first radio station. It is stationed here in the Pittsburgh, PA area where I live. Every Monday morning, after the 6:00 am, news, Jill Schlesinger is a guest on the show. She is a supposed economy expert out of New York City. On Monday morning December 18, she talked about the Republican tax bill and said, “There is no evidence that lowering corporate taxes leads to lower prices or higher wages.” She went on to say that such did not happen when Reagan lowered taxes.
A Short Economic History
That claim by Jill was a flat-out lie. The economy boomed under President Reagan in the 1980s. It only stalled when his vice-president, George H.W. Bush, succeeded him as President in 1988 and broke his “Read my lips, no new taxes” pledge. When taxes were raised, the economy faltered. As a result, when Bush ran for re-election in 1992, Bill Clinton beat him, under the motto, “It’s the economy stupid.”
The economy also boomed in the 1960s after JFK lowered taxes, but then stalled when taxes were later raised, especially by Jimmy Carter in 1978. Now it is true the economy was not that great during most of the 1970s prior to Carter when taxes were still low, but that was because of the gas crisis of that time. The economy also boomed during the 1990s when Clinton was in office and taxes were high, but that was because of the “dot.com” bubble. When that bubble burst in 2000, and then 9/11 happened, the economy again stalled.
But then after the George W. Bush tax cuts, the economy again boomed from 2003-2008. But that ended when the housing bubble burst in 2008. That happened due to the government-mandated Community Investment Act, which forced banks to give mortgages to people who could not afford to repay the loans.
Obama then came in and raised taxes, exploded the debt and deficit via his “stimulus” packages, and greatly increased government regulations. All of that lead to the lackluster economy we experienced the entire time he was president, with the growth of Gross Domestic Product (GDP) never exceeding 3%. That made Obama the first US President to never reach that mark. That lackluster economy led many millennials to assume such was normal for a capitalist society. But it is not, as has now been proven by President Donald Trump.
The Economy Under President Trump
With Donald Trump as President, we have seen over 3% growth in GDP in the second and third quarters of 2017, with projections that it might be as high as 4% for the fourth quarter. Compare that to the 1.8% it was in the last quarter of Obama’s presidency. The reason it has done so well under President Trump even before the Republican tax law was passed is due to Trump repealing a multitude of Obama-era regulations.
Trump made a campaign promise to repeal two regulations for every new one passed. Not only has he kept that promise as he has kept many of his other campaign promises, but he has surpassed it, with estimates being 22 regulations are being repealed for every new one passed.
And now, after the the Republican tax bill had been passed by Congress, but even before it was signed into law, we already saw the beneficial effects of it. AT&T almost immediately said they would be giving a $1,000 Christmas bonus to 200,000 employees as a result of the Republican tax plan.
What was the Democratic and liberal response to that announcement? Was it to rejoice that 200,000 people just got one thousand more dollars in their pockets? Hardly. They began calling for boycotts of AT&T! That is how very much Democrats hate Donald Trump. But now they have nine more corporations to boycott, as nine more major corporations followed suit with promises of bonuses and/ or wage increases for their employees, with some saying they would increase their minimum wage to $15/hour.
You would think Democrats and liberals would be happy about that last point, as that is what they have been saying they want for quite some time, a national $15/hour minimum wage. But since this is companies voluntarily raising their minimum wage rather than the government forcing them to do so, somehow Democrats cannot seem to rejoice over it.
But even more, their hatred of Donald Trump will keep them from celebrating anything good that comes from his policies. In fact, that is why Democrats are so against this tax plan, as they know it will work, and that will mean President Trump will be set up to win re-election in 2020, and that is something that just cannot tolerate.
Otherwise on the economy under President Trump, the stock market has hit over 70 record highs, the unemployment rate is at 4.2%, the lowest it has been this century, the labor participation rate is up, the number of people on food stamps is down, and consumer confidence is up. All in all, the economy is doing very well, and that is before this tax law takes effect.
The point is, tax rates most definitely affect the economy, and when the economy is doing good, all people benefit in the form of having jobs, higher wages, and lower prices. However, other factors also affect the economy. Mostly especially, government regulations can hurt the economy and that can offset the benefits of lower taxes. But combine low taxes and low government regulation, and the economy can boom, with possible GDP growth of 4-5%.
However, Democrats ignore all of this and lie to the American people, like House Minority Leader Nancy Pelosi declaring this tax law is “Armageddon” and “The worse law in US history.”
$1.5 Trillion Added to the National Debt?
Another lie of the media and Democrats is this tax law will add $1.5 trillion to the national debt over the next ten years. That is based on a Congressional Budget Office (CBO) estimate. But the CBO is assuming the economy will continue to grow at the lackluster rate it did under President Obama of less than 3%. But as was just discussed, the economy is already doing better than that and will probably do even better once this law is in full force.
As such, revenues to the federal govern will increase, not decrease, and if anything, this tax law will decrease the national deficit and debt, that is, if Congress can resist the temptation to increase spending. But, unfortunately, history is against that happening. But if the debt does rise, it will be due to that increased spending, not due to this tax law.
Basics of the Tax Law
The following are the basics of the Republican tax law:
1. Lowers the corporate tax rate from 35% to 21%.
2. The number of income tax brackets stays at seven.
3. Lowers the rate for the top bracket from 39.6% to 37%.
4. The bottom rate stays at 10% and the next to top rate stays at 35%, but the other rates drop as follows: 15 to 12%, 25 to 22%, 28 to 24%, 33 to 32%.
5. Nearly doubles the personal deduction for individuals and marrieds, from $6,500 to $12,000 for individuals and $13,000 to $24,000 for marrieds.
6. Doubles the child tax credit from $1,000 to $2,000.
7. $1,400 refundable child tax credit for those not paying any taxes.
8. Puts a cap of $10,000 on deductions for state and local income taxes (there had previously been no limit).
9. Drop in the deductible limit for interest on mortgages from $1,000,000 to $750,000.
10. Increases the exemption for the 40% death tax from $5.6 million to $11.2 million.
11. Businesses can immediately write off the full cost of new buildings and equipment.
12. Medical expenses will be deductible for those with expenses totaling 7.5 percent of income instead of 10 percent.
13. Charitable donations deductible limit increased from 50% to 70% of income.
14. Elimination of the Obamacare individual mandate to buy insurance.
15. Opens up the Arctic National Wildlife Refuge (ANWR) in Alaska for drilling.
The lowering of the corporate tax rate is the reason for the aforementioned ten companies already promising to pay their employees bonuses and/ or to increase minimum wages. As this new tax rate takes effect, more companies will follow suit. This will also lead to companies moving factories and corporate headquarters back to the USA or not moving them out of the USA and to expanding their businesses. That will in turn lead to an even higher labor participation rate and lower unemployment rate.
The building of new factories and the expansions of businesses will be bolstered by the ability to immediately deduct the full amount of business expenses. Formerly, deductions for such expenses had to be spread over several years.
The lowering of the tax rate for most income levels will mean lower taxes for most Americans. That will be even more so due to the doubling of the personal deductions and of the child tax credit. That will help those at all income levels. Yes, “the rich” will get a greater dollar amount of reduction, but that is because they pay far more to begin with. It is the percentage of change that matters, and those percentages are similar throughout the tax brackets.
Those with high medical expenses will benefit from the lowering of the threshold for deducting those expenses.
There is not an elimination of the deduction for state and local taxes (SALT) but just a cap put on the amount that can be deducted. This is important as this is one aspect of the tax law that has been said will cause most middle-income people’s taxes to rise, but that is a lie. It is only those who pay more than $10,000 in SALT that will see an increase due to that new limit. But that increase will be offset in most cases due to the preceding points.
Moreover, there are some states that do not have any state income taxes, like Texas and Florida, so their residents will not be affected at all. Here in Pennsylvania, our state income tax is 2.2%. Therefore, for someone to lose out in this regard, they would need to have more than $450,000 of taxable income. That is hardly middle class. It is those who live in the few states with exorbitant state taxes, like New York, California, and New Jersey, that will be mostly affected. The state tax rate in New York is 10%, so it will only be those with taxable income above $100,000 that will be affected. That might not be rich, but it is still not quite middle class either. But this provision could mean an increase in taxes for “the rich” in high tax states.
It is also only the rich that will be affected by the drop in the deductible for interest on mortgages, though they will benefit from the increase in the exemption from the death tax.
But overall, if anyone is negatively affected by this tax law, it will be the rich, not the middle-class. In fact, estimates are 80% of Americans will see a reduction in their taxes, while less than 5% will see an increase, with the latter being mostly the very rich. The very poor with children will even get a gift of $1,400 from the government for each child due to the refundable child tax credit.
Another lie being perpetrated is that charitable contributions will no longer be deductible. That is not true. In fact, the limit for deducting charitable contributions is increased from 50% to 70% of income. Admittedly, I don’t know anyone who gives 50% of their income to charity, let alone 70%, but if you do, it can now be deducted.
Where some of the confusion in this regard might be coming in is some charities have said they expect to see a decrease in charitable contributions. The reason for that fear is a bit complicated. But to try to explain, with the increase in the personal deduction and child tax credit, it will not be beneficial for some people to itemize who currently do so, but it is only by itemizing that charitable contributions can be deducted. As such, the fear is that people will donate less since they will not be itemizing and thus not be getting a tax deduction for doing so. Whether that proves to be the case or not remains to be seen. But I will say, if your reason for giving to charity is to get a tax deduction, then your attitude towards giving is wrongheaded. The Bible says, “God loves a cheerful giver” (2Cor 9:7), not “God loves the person who gives to get something in return.”
The elimination of the Obamacare mandate will not cause millions of people to “lose” their health coverage as it is always worded by the media and Democrats. Millions of people might “chose” to not buy health insurance. That is a bad idea, but it should be their choice in a free country. See my two-part article on health care for more in this regard.
Finally, how opening up ANWR for drilling got into this tax law is due to negations with Alaskan Senator Lisa Murkowski to get her to vote for the bill. But opening up ANWR is a good thing, as there are potentially massive amounts of oil there, and drilling will go a long way towards making America energy independent. And it can be done in an environmentally friendly way, contrary to liberal claims in that regard.
This tax law is not perfect on several conservative principles. First, Congress failed to reduce the number of tax brackets from seven to three as was seen in the initial House bill. But even better than three brackets would be one tax bracket, which is to say, a flat tax. The Biblical tithe is 10% for all people, regardless of income level. The rich pay more than the poor due to 10% of a large number being greater than 10% of a small number. That principle should be followed by the government in taxation, the same tax rate for all, with very few deductions. That would be the ideal, but this tax law is far from it.
Second, there should be no deduction for state and local income taxes. That causes those living in low tax states and municipalities to subsidize the liberal governments of high tax states and municipalities, and that is just not fair nor equitable. An elimination of the tax deduction would force liberal states and municipalities to lower their taxes.
Third, the death tax should be eliminated altogether, as that property and savings was already taxed when it was first acquired, so to tax it again it a double tax.
Fourth, the personal tax rate reductions are temporary, set to expire in 2025. That is due to Senate reconciliation rules. If Democrats had gotten on board with the tax bill, then using reconciliation would not have been necessary, and the tax rate deductions could have been made permanent. But since not one Democrat was expected to vote for the bill, nor did any, then that had to be the case. As such, it is disingenuous for Democrats to emphasize this point now. Moreover, it is hoped that whoever is in power then, there will not be the political will to raise taxes, so the reductions will be allowed to continue.
Fifth, charitable contributions should be able to be deducted without itemizing. In fact, in my ideal of a flat tax with its postcard-sized tax return, charitable contributions, along with rather large personal and dependent deductions, would be the only deductions. Otherwise, everyone would pay the same rate.
What is Not in the Law
The original bill had a provision allowing those who home school their children to save money for home schooling expenses in a tax-free saving account. But the Democrats raised a stink, saying that provision violated Senate reconciliation rules, so it had to be dropped out of the bill. But that was after both the House and Senate had voted on the bill. As a result, they had to do a revote.
That revote was touted in the media and by Democrats as showing the Republicans did not know what they were doing and left many Americans thinking the Republicans were playing fast and loose with the rules. But in fact, it was an honest attempt to give a tax break to home schoolers. But the Democrats saw in it a way to score some political points, so they insisted it was against the very complex reconciliation rules. Rather than staging a fight which would have dragged out passage of the bill, Republicans removed the provision. What that means is, if you home school your kids, you lost out on a tax break due to political posturing by Democrats.
Also not in the law was a repeal of the Johnson Amendment. That amendment dates date to 1954 when later to be President Lyndon B. Johnson was still in Congress. It prevents tax-exempt organizations like churches from endorsing political candidates at threat of losing lose their tax-exempt status, but it has had the further effect of stifling any political speech from the pulpit. That goes against the whole history of the United States prior to that, when preachers were often in the forefront of political action.
As a candidate, Trump promised to have the Johnson Amendment repealed, and he already issued an executive order ordering the IRS to not enforce it. But that executive order could be easily reversed by another executive order by a future President, while it would be much harder to reverse it if it were repealed by Congress. But again, that repeal was ruled to break Senate rules, so it had to be left out.
This tax law is not perfect, but it is far from “Armageddon.” And it is not a “tax break for the rich.” It will benefit almost all Americans. In fact, that is the media’s and the Democrats’ biggest fear about it, that it will be successful, that Americans will see an improved economy and bigger paychecks. That will ensure President Trump and the Republicans stay in office, much to the horror of Democrats and the media.
The “Short Economic History” is mainly based on my experience of having lived through those decades, but also on discussions about this topic on the Sean Hannity, Rose Unplugged, and Rush Limbaugh radio shows. Those talk shows are also the source for some of the other information and statistics.
Other sources for information and statistics are various shows on FNC and FBN, especially the analyses before and after and the notes on the crawl during President Trump’s and the Republican Congress’ spike the football speeches after the tax bill was passed. Plus, news briefs on CBN News, along with as much of CNN and MSNBC as I could stomach.
Also: The Atlantic. What’s in—and Out of—the Final Republican Tax Bill.
Democrat and Media Lies About the Republican Tax Plan. Copyright © 2017 by Gary F. Zeolla.
The above article was posted on this website December 23, 2017.
Articles 2017 Articles
Alphabetical List of Pages Contact Information
Text Search Biblical and Constitutional Politics