The Next Chapter: Tax Reform & Inequality

AP Evan Vucci

(AP/Evan Vucci)

The White House released its tax plan today, kicking off the next chapter in Congress’s legislative agenda. Donald Trump made the announcement, quickly moving on from the latest defeated attempt to repeal the Affordable Care Act. Tax reform is important because it directly addresses the economic inequality in the country and will determine how much we pay/receive when we file taxes in April.

A quick note: the plan released today is a framework for Congress to work off going forward. It is not a comprehensive bill. Donald Trump’s economic team essentially released a white paper on what they would like to see happen in any substantial legislation. For this reason, there are substantial questions about how the bill would impact most people. The framework leaves much to the discretion of Congress. But as a consequence, it is very difficult to answer the most urgent questions people have (How much will this reform save me? How much will it cost my business?).


Is tax reform necessary?

Any major legislative push attempted by a political party can quickly ignite biases in people. But on this issue, both sides agree that tax reform is a major issue.

The retail reason being touted is that taxes are convoluted and nearly impossible to decipher. This plan touts its goal of drastically simplifying the tax code.

The larger issues that tax reform tackles include: spurring economic growth, generating revenue for federal programs, reducing the deficit, addressing income inequality, etc.

The argument that it is not necessary is if you believe more harm than good would be caused by new legislation. This can stem from a lack of confidence in political parties and/or faith in the process of parties negotiating and making concessions to achieve comprehensive legislation.


How is Donald Trump’s plan reported in the media?

Tax Reform Fox News 9.27.17

(Fox News front page 9.27.17) Photos set the tone of a piece too

First – here is a CNN Money article that just goes over the facts of the framework. At this time, most of the stories are about the content of the framework. There is little about the response (at least for now). There is little about analyzing the values of what this framework seeks to accomplish.

The New York Times has made the news its feature story, under the headline, “Trump Proposes the Most Sweeping Tax Overhaul in Decades.”

The lede: President Trump on Wednesday began a full-throttle push to slash taxes and salvage what is left of his foundering legislative agenda in Congress, proposing a politically challenging array of tax cuts for individuals and businesses that would constitute the most sweeping changes to the federal tax code in decades.

Mr. Trump, smarting from the latest defeat this week of his efforts to dismantle the Affordable Care Act, cast his tax plan as an economic imperative and the fulfillment of a promise to his coalition of working-class supporters to deliver benefits in the form of lower taxes, better jobs and higher wages. But the president offered few details about how working people might benefit from a plan that has explicit and substantial rewards for wealthy people and corporations, including the elimination of taxes on large inheritances and deep reductions in the rates paid by businesses large and small…

That was a lot so let’s break this down.

Donald Trump is the focus of the lede.

Now notice the context. Trump unveils tax plan following a political defeat. He is “smarting from the latest defeat” and attempting to “salvage what is left of his foundering legislative agenda.”

Based on the lede, who benefits? Clearly wealthy people and corporations do. Working class voters might, but there is nothing in the tax plan to support that yet.


Now compare this to Fox News, their headline story is “Trump promises ‘significant’ cuts in newly unveiled tax reform plan.

The lede: President Trump promised drastic tax cuts Wednesday as he touted Republicans’ newly unveiled tax reform plan, arguing the push to re-write the tax code would fuel “America’s economic comeback.”

“These tax cuts are significant,” the president said during a speech at the Farm Bureau Building in Indianapolis. “There’s never been tax cuts like we’re talking about.”

Republicans on Wednesday released the framework of their plan that was hammered out by House and Senate lawmakers in coordination with the Trump administration.

The plan would simplify the tax system, cut rates and nearly double the standard deduction used by most Americans.

Again, Donald Trump is the focal point. This time there is no mention of his politically weakened position.

Based on the lede, who benefits? It looks like everybody does. The last sentence indicates the key impacts of the tax law. There is no mention of benefits to wealthy vs benefits to middle class. In fact, the standard deduction applies to “most Americans.”

Also notice how “the plan was hammered out by House and Senate lawmakers in coordination with the Trump administration.” That makes it sound a lot like all parties are on board.


So we have New York Times readers approaching this tax plan as another tax break for wealthy families and corporations. The Times is right to point out that the concrete details of the plan are clear on the benefits to these two groups, while there is little concrete benefit to middle class families yet.

On the other side, Fox readers will approach this believing that it’s a well-rounded plan. It reduces taxes, it has input from many stakeholders, and it benefits deductions used by most Americans.


What do you want to see in a tax bill?

This is the key as more details unfold in the coming months. Is your primary concern whether or not you pay more or less? That is fair.

Is your primary concern whether the bill requires the wealthiest Americans to pay more? This is fair too. Senator Bernie Sanders had great success running on this platform which indicates it is a priority for many Americans. The data is clear that wealth inequality in America is growing. 20% of the national income goes to the top 1%. 12% goes to the bottom 50%. I add these details because this is going to be the argument put forth by the Democratic party.

Growing wealth inequality CNN Money

(via CNN Money)

Is your primary concern reducing the deficit? The Republican party will argue that taxes are burdensome on businesses. They will say cutting them will bolster private sector growth and the deficit will be reduced. Stay tuned to see numbers on this as the plan undergoes economic analysis.

Figuring out what is important to you will help decipher the flood of talking points coming our way as this debate takes off.


What can you do?

Once you’ve figured out what you want to see in the bill, let your representatives know. Let your Senators know, your House Reps know, and the President know. You can do so by calling them or writing a letter.

When you reach out to them, just let them know something along the lines of, “My primary interest is that this bill addresses [X].”

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