Hey! Whatever happened to Fair Tax Flat Tax Proposals we heard about Earlier in the Year?
By: Edwin L. Crammer CPA – During the primary season that just passed the candidates were falling over themselves to propose that if they were elected President of the United States, they would, radically change the tax code. They stressed was antiquated and full of favoritisms for a certain group of people, and they would change it to a simpler system of taxation. For several of the candidates one of these two so called radical methods of taxation formed a major part of their proposed agenda.
Earlier this year I wrote a column on the above subject regarding these two changes to the current way we collect our taxes. I explained in detail what they were and how they would work if one of them was implemented. I also gave my opinion that I personally did not favor either one of them.
Well now that primary season is over and we are now getting into the meat of the election campaign, you will notice that neither of the two candidates in their economic speeches given several weeks ago, propose anything close to one of those two radical tax ideas.
Instead, the tax proposals offered by both Donald Trump and Hillary Clinton were just variations of the current tax code. Instead of one Flat or Fair tax idea they just played around with the various Tax bracket percentages from what they currently are. One plan had fewer tax bracket percentages than what we have now and the other candidate had more Tax brackets with the top bracket percentage higher than what is the current top percentage. Neither one of them gave out any specific details on how their plans would be put together other than to throw out their proposed tax brackets going forward. In reality, regardless who wins the White House, this fall, neither one of these plans will be the final plans adopted by Congress. It just sounds good for the public, the same as the two plans mentioned above sounded good.
I knew this was going to happen. The reason is that for all of the years that I have been following political conventions and the proposals that are thrown out during the campaigns I have heard these same two proposals offered almost every election year from one or more of the potential candidates.
In essence they sound great and a good selling point for the candidate that proposes one or more of them, but in practice they are unsound and will not work the way they are offered. I will not go into detail why. If you want to know the answer to that you can read my earlier column.
This is how it works in all political election campaigns. The candidates of both parties are, equally to blame. They throw out all kinds of proposals most of them radical and most of them unworkable, just to get attention. These proposals specify what they are planning to do once they are in the office. It all sounds great, but guess what, most of it is quickly forgotten once they are sworn in and show up for work the first day, if they are lucky to win the election.
But let me be clear, some of the proposals thrown out by a candidate once elected to office sound good on paper and might work, but it would be great if that’s all that has to be done to get that idea on the books, but there is still Congress to deal with. This is especially true if the majority of the Congressman are from the opposing party as the President, they either refuse to go along with the proposal coming from the President and just shelve it or water it down so much that it looks nothing like the original proposal.
Other situations that can kill off a good proposal and make it unacceptable are items tacked onto a bill called “Earmarks”. These are items tacked onto a bill in Congress that have nothing to do with the original bill by congressman that will benefit the people or businesses in their district. It is away to get obscure benefits to a congressional district that could not get through Congress without being tacked onto another what could be a popular bill. A Congressman or two will have these obscure proposals added to a bill in order for the individuals pushing the bill through Congress to get that Congressman’s vote.
What happens sometime, however, that a bill that sounds good on paper and seems to offer great benefits for a large segment of the population will be so greatly loaded with earmarks, some of them dreadful that the bill will get voted down and not pass.
Congress has been trying for many years to do away with earmarks to no avail as the only way they will go away is if congress would vote to do them away and as most Congressman benefit them from time to time, there is no way this is going to happen.
Because of all this, one should believe very little in the promises and the benefits proposed by any of the candidates in an election and just look at that person as an individual, what they have accomplished in the past and how they present themselves going forward, then decide which one seems to be the best person for the job.
You may contact Edwin L. Crammer CPA at: Edwin@edwinlcrammerpa.com