Brady's tax reform plan

On my way to work this morning, I listened to an NPR interview with Texas Representative Kevin Brady. As chairman of the House Ways and Means Committtee, he is a leader in the Republican charge to overhaul taxes.

A number of things he said caught my attention, because they seem like deliberate attempts to benefit the top 1 percent of earners. For example:

"We're going all in for growth, you know, on jobs and paychecks. And if we do that right, look, we can improve the lives of every American. And so we're really taking our time to get those bold pro-growth policies right."

First question: What does he mean by "all in for growth"? Does it mean cutting taxes in the hope that it will stimulate the economy and we'll get more tax revenues later (i.e. "supply side economics")? Because that doesn't actually work. [Source] President Bush cut taxes in 2000, but it didn't help the economy to grow any faster than it did in the 1990s, and it didn't result in higher tax revenues.

And then there's the part about paychecks. Only 51% of American taxpayers owed any taxes on their April 15th federal returns. (Mitt Romney caught hell for this criticism about this in 2012.) The rest either don't make enough money (~25%) or are exempted because they're working families with children or are elderly (the other ~24%). [Source]

This is the case with me. Even as a captain in the Army, I don't make enough taxable income to owe federal taxes. Part of this is because of tax strategies and retirement accounts, but that's how the system is.

So the claim to "improve the lives of every American" makes me wonder what he's talking about. You can't lower taxes on the 49% who don't pay them.

Oh! But you CAN lower taxes for the other 51%, and pretend that "every American" benefits. This group, by the way, happens to include the top 1% of earners.

So, obviously, we want to, for families, lower tax rates at every level and simplify the code so much that 9 out of 10 Americans will be able to file using a simple postcard style system

Second question: How do you simplify things so much you can fit a tax return on a postcar? Answer: a more regressive system.

Currently, things are more complicated because higher income folks pay a higher percentage of their income. So your first $18000 may be taxed at 10 percent, but your next $75,000 will be at 15 percent. It goes up from there.

The call for "a simpler tax code" sounds nice, but there are tax softwares specifically designed to mitigate this issue, and they're not really all that expense. What Bradyreally means by "simpler taxes" is lower taxes for those highest earners who pay higher percentages.

And we want to focus - to balance this within the budget over time. And so part of it comes from stronger economic growth. But, also, that alone won't complete it. So you have to jettison a lot of special provisions for some - lobbyist loopholes, exclusions, all that - so we can lower tax rates for everybody. That's part of going to a much simpler tax code.

Third question: When you say "over time," what kind of time frame are we looking at? Because the following sentence sounded an awful lot like that "supply side economics" we discussed earlier.

And what kinds of exclusions do you mean? Because closing loopholes will only affect one of two types of people -- those who don't already pay taxes and those who do. Without more details, "closing loopholes" to me sounds like another way of saying making "raising taxes on people who don't deserve it."

I look forward to more details on the tax reform plan, but not at the expense of regular folks nor to the benefit of the richest 1 percent. We'll have to see what happens...