Now that Johnny Mac has blown the healthcare reform out of the water until the next Congress, we can get back to subjects we’re more comfortable with on business.
The next order of business for the Washington Wizards is tax reform, and there’s a good editorial in today’s Wall Street Journal outlining what’s supposed to be in the tax bill. After all the misinformation on healthcare, guys, let’s get this one right.
- Business (I’m presumptively speaking for it, with 85,000 readers, most of which are in the US) would like a RATE CUT FIRST, to about 15% or so, which would make us competitive with the rest of the world.
- We agree with the Journal, make the rate cuts retroactive to January 1, 2017. Many of our clients already have low tax rates, courtesy of buying depreciable assets, but there’s a limit as to how much they can buy (only their bankers know for sure).
- Reform second, but it’s not clear what’s going to get reformed. Maybe a shorter, simpler tax code? More liberal business expensing? There are a lot of carve-outs (eg electric cars’ tax credits), and maybe these need to get back to a more rational basis. State and local taxes used to be deductible, too.
- If the business rate cut goes through, it will lop off about 15% of tax revenues (our estimate). How about cutting spending 15%? Mad Dog can probably even find some in defense. Workfare is back!
So, let’s go Wizards. We and the Journal have given you some starting points.