Winners and Losers

Everybody tends to complain about taxes and of course that is going to continue no matter what comes out of the monkey house.

The complaints that got this ball rolling though really seem to come down to two that bother business and wealthy people.

The business tax is too high.

The Government imposes an estate tax on large estates.

The other things in the tax discussion, number of brackets, too many complex deductions etc. simply serve as smokescreens to cover up the fact that tax "reform" is designed to help business and allow the wealthy to keep their money in the family.

Neither of those objectives are particularly bad and if the tax rate is in fact suppressing business we probably should adjust it, although the evidence for this is slim.

Similarly, passing on your estate to your heirs isn't a bad thing, although it could be argued that years ago the top tax rate was lowered with the understanding the estate tax would collect at the end.

However, for every dollar given back to business or the wealthy, it has to come from one of two places, increased taxes for others or an increase in the debt.

This therefore creates a big pool of potential losers, but a plan that simply gives money to those that don't need it and takes it away from those who do is simply not going to pass, so it had to be additionally complicated so the losers are not as obvious.

Of course the $1.5 trillion increase in borrowing made this easier, but that money has to be paid by future people, unless of course we simply default.  Its like refinancing your house to pay current bills or to buy a car, it sort of works on a short term basis but leaves you owning less of your house.  If the house value just keeps rising it works OK, but watch out for a financial crisis.

Similarly increasing the deficit is potentially painless if the economy grows enough to generate more tax revenue to pay it off in the future.  That's very unlikely although it is the smoke and mirror the monkey house is relying on.

That is still not enough so you have to make other citizens pay more, over time to cover the difference and keep within the budget guidelines.

The shifts are complex and some Americans think they are getting a reduction (for the first few years) and others will pay more immediately.  Most will pay more over time but as I said, the smoke and mirrors took a lot of time to put together so its almost as complex as what we already had.

Homeowners, people in states with income taxes or high property taxes or people with high medical bills are losers right off the bat.

The retirement savings is an attractive target, take away money from middle class savers so wealthy people can leave more to their heirs.

I guess we know who the winners are.