As you read this, President Trump's tax plan is being debated. Congress will change it. Where this ends, no one knows.
I want two things:
2. More money in private hands.
Trump offers some of both.
His cuts would leave more money in private hands, where it will be used more efficiently. Politicians' spending decisions already put us $20 trillion in debt; they shouldn't be trusted with more money.
Cutting the corporate tax rate isn't popular (rich people!), but a cut is needed. Economic growth is really important. It's stifled when America's taxes are higher than other nations'.
Trump also offers some simplification. Good. The more complex the rules, the more time we waste hiring accountants and the more time lawyers spend fighting over who qualifies for what. Trump would double the personal exemption (fewer people will itemize) and kill the "death tax," deductions for local taxes and the alternative minimum tax.
It's a start. But that's not nearly good enough. Heck, the "simplification" bill itself is 400 pages long.
Americans spend about 7 billion hours trying to comply with today's tax rules. That's the equivalent of 3.7 million people working 40-hour weeks. What a waste.
I spend hours filling out forms and forwarding paperwork to an accountant. I distort my spending and investments because of tax rules. What a waste.
America's first 1040 form was four pages long. Today's code is more than 3.7 million words. No one understands it.
Even the tax specialists get things wrong.
Yet parts of Trump's plan make taxes more complex: He increases the child tax credit and creates a new credit for nonchild dependents. It may be fair to help people who care for helpless adults, but each new deduction creates complexity and parasites who feed off it. As usual, some rich people will game that credit, and some poor people will never figure it out.
Far better to lower everyone's taxes to, say, 15 percent, by getting rid of all deductions.
Then we could focus on creating wealth instead of filling out forms.
But good luck with that, President Trump.
Today's tax deductions are the main reason we've got a huge culture of lobbyists.
One of the most unfair tax breaks is the mortgage interest deduction. It encourages rich people to buy more homes than we need. It exacerbates housing bubbles.
Photo Credit: 401(K) 2013