Friday, December 22, 2017

The Tax Bandaid

So what's the big deal over this tax plan? I think we have just been sold an overly bally-hooed, suspender-snapping boast by the Republican congress.

If the estimate that it will add $1.5 trillion to the so-called national debt over a ten year period is true, then the thing saves the taxpayers very little. $1.5 trillion over ten years works out to only $150 billion per year. With recent deficits running in the $400 billion to $600 billion range, the addition of another $150 billion per year to the deficits is hardly anything to write home about, especially if those deficits are composed primarily of corporate and upper 10% earners' tax breaks which contribute little to the needed consumer demand that drives American production. An additional $150 billion added to the annual deficit averages only about $461.00 per US citizen. That's not much money in the big scheme of things. It certainly is not cause for any alarm about inflation nor federal bankruptcy (which, by the way, can never involuntarily happen).

Now, if the tax plan were adding $1.5 trillion per year to the deficit, that would be adding $15 trillion to the so-called (but not really) national debt over that ten year period. Even that would not be disastrous. It would just mean that an extra $15 trillion would have been used by the private sector before being stashed away in those private savings accounts called treasury securities.

All this concern over deficits and debt is just so much "the sky is falling" rhetoric. The tax cuts could have been and should have been much larger, especially for those making under, say, $125K per year. This thing, as it stands, is little more than a tax bandaid applied over an imaginary tax cut.

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