(12-22-2017 09:43 AM)mturn017 Wrote:  There's a difference between lowering taxes and expecting growth caused by a less burdensome taxing system to increase revenues and actually increasing the effective tax rate while lowering the nominal rate via ending deductions thus creating more revenues. The first can be argued, the second is just math. You need only look at AMT to see the proof of that. Less deductions and lower rates lead to higher taxes for some taxpayers in the same year, growth is not part of the equation. This law is an example of the first, Simpson Bowles' approach was the second. The left is skeptical of the first but weary of the second, not because they don't believe that it will increase revenues but because they believe it will disproportionately effect lower income taxpayers.
Let's put this in perspective. Simpson Bowles identified nearly 18 Trillion worth of tax breaks to eliminate. Current Bill has around 3.5 T. And that's not accounting for the breaks that they actually expand in the bill: increased Child Tax Credit, expansion of section 179, accelerated recovery period for 1250 property, ending the limitation on executive pay deduction, etc. The net effect is that there's very little in the way of "expanding the base" in this law, as Simpson and Bowles say in their op-ed they took the "goodies" but refrained from making any of the hard choices. So the question isn't really why the Democrats are opposed to this bill, it seems obvious. The question is why would the Republicans have supported Simpson Bowles' proposal when it would have increased the tax rate (effective tax rate that is) on a lot of people and businesses? The answer is they didn't. But that was part of the "grand bargain" if they were going to get the Democrats to seriously consider entitlements reform. Neither jumped though and instead they came up with automatic across the board cuts (which this law will trigger). I'm sure they'll take up entitlements reform soon (a real tough sell) but don't be confused when the Democrats oppose that as well because you can be sure defense spending cuts won't be a part of it and those cuts also won't be anywhere near the bipartisan proposals brought forth 7 years ago.

My only point was that the lowering of tax rates was championed by both Bowles-Simpson and Domenici-Rivlin, when democrats have been clamoring constantly for raising rates as the only solution. The unfortunate political reality is that demagogues abound to invoke class warfare whenever any changes are made to tax laws, and that limits the extent to which deductions can be eliminated.

I supported the Bowles-Simpson and Domenici-Rivlin approach. We did it in 1986, with Reagan combining forces with Bill Bradley and Dick Gephardt, and we had a decade and a half of growth. Europe taxes that way, even more so than we do, with a consumption tax too, which is another idea I support.

I expect that this law will reduce revenues for a year or two, but I do expect that increased growth will make it ultimately revenue neutral or positive. It will be hard to pull the data out of the noise, but that is the result that I expect.

We have been losing tax revenues to high rates, compared to the rest of the world, particularly on the corporate side. And the unfortunate knock-on effect as that we lose middle class jobs in the proposition. I do think this bill will help the economy. Maybe not in time for the 2018 midterms, but ultimately yes.