In my last column, I told you all the problems I’ve found in the GOP tax plan. It’s the first tax cut proposal in my lifetime that I’m not excited about. The GOP is making a big mistake — unless changes are made. But I remain hopeful those changes are on the way.
President Donald Trump came up with a great idea: stimulate the economy by passing the largest tax cut in history. But as usual, this idea has been hijacked by lawyers, lobbyists, consultants and billion-dollar multinational corporations. So now, instead of a much-needed tax cut for everyone, it’s mostly a big tax cut for corporations and a little tax cut for small businesses and individuals. Congress is once again screwing over the little guy.
The president specifically wanted a new tax rate for small-business owners (like me). Because we are the economic engine of America, risk our own money to fund our businesses, work long hours and create a large majority of new jobs, Trump agreed we deserve a break.
Hence the special 25 percent tax rate for small-business owners. Great. Except Congress created a special tax rate that applies only to 30 percent of a small-businessperson’s income. The other 70 percent gets taxed at the highest personal rate. And the top personal rate is still 39 percent. In addition, you’re taking away most of our deductions? Thanks for nothing.
But rather than complain, I prefer to provide solutions. Here are a few:
■ Keep the mortgage interest deduction intact. This is the most important tax deduction on the planet for millions of American homeowners and real estate professionals. All of them vote. If the GOP wants to win elections, override the House version and keep the mortgage deduction.
■ Keep the property tax deduction. I would eliminate the state income tax deduction but compromise by keeping in the full property tax deduction. State income tax is a choice. You can choose to live in a high-tax state such as New York or California. Or you have the freedom to escape to places such as Nevada where state income taxes are zero.
But everyone pays property taxes. How could millions of American homeowners afford to pay a federal income tax on money they’ve already used to pay their property taxes? Paying taxes on taxes? The Founding Fathers must be rolling over in their graves.
By the way, if eliminating the property tax deduction is such a great idea, why does this GOP plan still allow corporations to deduct 100 percent of their state and local taxes?
The compromise is so simple. Eliminate the state income tax deduction for everyone — both companies and individuals. But retain the full 100 percent property tax deduction for all filers.
■ Keep the medical expenses deduction. Because of Obamacare, health care costs are the highest in history. They are eating up all the budgets of middle-class Americans. Yet at this moment in time the House chooses to eliminate any deduction for these expenses? Those wallowing in the D.C. swamp live in a different world than the rest of us.
■ Equalize the tax treatment of big and small business. Apply that special 25 percent tax rate for “pass through businesses” to all of their income. If you have to raise more revenue to accomplish that, simply raise the corporate rate from 20 percent to 23 percent.
Simple fixes. Make these changes, and I’m “all in.” I’m still unhappy with the high tax rates for individuals. Just be sure that Trump comes back by 2020 with a much bigger reduction in individual rates — just as Reagan did the second time around.
Make these changes and Trump wins re-election by a wide margin.
Contact Wayne Allyn Root at Wayne@ROOTforAmerica.com. Hear or watch the nationally syndicated “WAR Now: The Wayne Allyn Root Show” from 3 to 6 p.m. daily at 790 Talk Now and at 5 p.m. on Newsmax TV.