Usually we write about fitness or related equipment or workout topics but this week we are straying far from our normal routine to talk about the insanity of the “tax reform” that has been passed by the House and is being currently debated in the Senate. To cut to the chase, even though the owners of Treadmill Doctor would benefit greatly from the passed bill or even those proposed by the Senate, doing any of this is insanity at best or greed in its worst form at the worst.
The two owners here at Treadmill Doctor have been solidly in the “1 Percent” for around a decade and even though we aren’t among the mega rich in America, we have more than we know what to do with. Along with a big income, we also have a huge six figure tax bill that collectively hasn’t been below a quarter million in recent memory. Even though this is the case, our bill doesn’t need to go down.
In fact, if Congress would get their act together and start acting like grownups with spending, I would dare say that our bill needs to go up to help resolve the deficit and debt problems this country is facing. For example, Federal Reserve research indicates that taxes don’t impact economic growth negatively until they rise above 20% of GDP and right now, we are slightly above 18% of GDP.
You might ask, “won’t tax reform…i.e. tax cuts…create new jobs and raise ordinary people’s income?” The answer is just look at where corporations are today. Corporate profits are at an all-time high, according to the very conservative press including CNBC and the Wall Street Journal, and yet trillions of dollars are spent on stock buybacks and are passed along to stock holders in dividends. It hasn’t raised stagnant worker wages, nor has it meant any meaningful increase in net jobs. If we give huge tax cuts to corporations and business people with pass through income, why would we expect any of them to act differently than they are doing today?
The answer is, they won’t! When you get to the minutia of the “reform bills” what you will find is that the average person is going to see a slight tax cut initially but many of the provisions expire, sunset, or decline so that, within the 10-year period that this “reform” is framed, the Wall Street Journal tells us that over 50% of average taxpayers will actually see an increase in their taxes.
The ones that won’t see their cuts go away are the corporations, the rich, and those who are inheriting wealth. That gift will just keep giving and giving and giving…like the Energizer Bunny. I heard someone on CNBC the other day say that it is just about fairness regarding the elimination of the inheritance tax but if you are anything like me, I learned life wasn’t fair a long time ago when I was whining to my momma. Rich people who have benefited greatly from the system and the country we live in should give back.
All this said, this is not to say I think anything positive for the country will happen. Rather, I suspect us rich people will get a big tax cut, the working guy and gal will get stiffed, and my heirs will be happy to receive their money tax free when I die. All of this works out great until the average guy or gal decides to take matters into their own hands and a Robespierre figure rises to help the rich understand that those who have been told to “eat cake” when there is no bread have a high price to pay for their greed and indifference.