The GOP Aims At Its Own Foot — Again

On June 19th my local newspaper, The Signal, published an opinion letter by Thomas Oatway entitled “Legislators must stand up against potential tax reform threats” (Link). In that letter Thomas urged Congressman Steve Knight and other California Republicans to “fight to derail this plan”, and I want to add my voice to that chorus.

As Oatway correctly pointed out, eliminating the federal tax deduction for home mortgage interest and property taxes will have a very negative impact on home ownership, particularly for the middle class.

Why would the GOP be so stupid as to eliminate the deductions that their natural base depends on? It would be electoral suicide.

This is yet another loony proposal popping from the “mind” of Paul Ryan, a nerd without a lick of common sense.

Congressional Republicans promoting this plan claim that by increasing the personal exemption and decreasing the number of brackets, these eliminations will be essentially “harmless”, and they’ll still be there for people who elect to itemize their deductions.

But eliminating the mortgage and property tax deductions is going to immediately cause home values to drop (http://www.businessinsider.com/gop-tax-plan-could-affect-real-estate-market-2017-1). Who owns most homes numerically? The middle class, the exact same demographic from which the GOP draws most of its support.

So, as those people sit there, with their ongoing mortgages and property taxes, they’re going to see the value of their homes drop out from under their feet.

Then there’s the secondary, or ripple, effect. As home values drop, so do rental values. So, those who own investment properties are going to see their income decrease as rental incomes chase property values down. That’s a direct effect on income for those people.

As a homeowner, I’m looking at personally losing almost $50K in hard equity from my house. Why would I think that’s any kind of good idea at all? That’s exactly the same thing as taking $50,000 out of my savings account. Why would I vote for someone who wants to do that? I may as well vote for a Democrat!

Who actually benefits from this? People who can’t afford to buy homes, or others who are renters, and I’d guess the majority of them are people who support Dems.

So in reality, the GOP will manage to alienate middle class home owners and investment owners, their natural base (as I said), while providing a benefit for people who are never going to vote for them anyway.

In what alternate universe does that sound like a good idea?

 

 

©Brian Baker 2017

 

(Also published today in my local newspaper The Signal)

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20 comments on “The GOP Aims At Its Own Foot — Again

  1. Virginia Patriot says:

    It sounds like a good idea to Democrats in R jerseys.
    Once you accept that they are pushing the same agenda just at a different pace, their actions make more sense.
    The No Repeal, repeal of Obamacare for instance.

    • BrianR says:

      Absolutely, VPat. This is the type of thing that illustrates the reason I left the GOP back in 2008. They’ve turned into the Dem-Lite party. They’re just as intent on driving the car of our country off the cliff, but they want to go through the guard rail just a bit slower.

  2. The Crawfish says:

    If they want to reduce deductions while being GOOD to the middle class, the way to do that is with the Fair Tax.

    The Texas GOP is looking at a reform of property taxes. I had to inform my state rep that a lot if disabled vets rely on a state property tax benefit. 100% VA disability rating equals 0% property tax. He didn’t know.

    • BrianR says:

      I haven’t really looked into other proposals. All I know is that this sure isn’t an answer.

    • Grey Neely says:

      Crawfish, I agree with you. Let’s eliminate the IRS and the Tax Code all together! With the Fair Tax, whenever you buy something, you basically pay a “consumption” tax. The time and cost savings alone from not having to file any tax forms would be enormous. And everyone will pay something, not only the rich and middle class but also the poor (everyone will have a “dog” in the fight).

      Most importantly the IRS will be gone. Neither political party will ever be able to use the IRS again as a “political club”.

      • BrianR says:

        I’m not sure I’m buying into this at all.

        First of all, it sounds like the mortgage and property tax deductions will be gone, once again, and I am dead set against that.

        Secondly, you’re essentially talking about a VAT, a “value added tax”, and that’s a recipe for disaster. I’ve seen it in operation, in Vancouver BC when I visited there about 10 years ago. They had a 14% VAT. It jacked up the price of goods and services immensely. Now, add that to any state taxes a person pays, and the tax burden’s even worse than now. How’d you like to add 14% in tax to the price of a car? Or a HOUSE? Here in LA, our local sales tax is about 11%. Add a VAT of 14%, and anything I buy would have 25% added to the cost in sales taxes… PLUS I’d still face a state income tax. It’s absolutely absurd.

        Compound that with the fact that there’d be nothing to prevent that VAT from being jacked up in the future, and you can bet your last dollar — which would very soon be leaving your wallet under that system — that the VAT would continue to be jacked up as time went on.

        On top of all of that, you just KNOW that in order for such a program to actually pass, there’d be so many “exemptions” and special treatments for “the poor” carved into it that not only would it NOT do anything to ease the burden on the current taxpayers, it would actually make it worse.

        Which brings us to the root of the issue. The problem in this country isn’t the tax system. It’s spending. Ever since FDR we’ve been trying to create a bastardized mix of socialism and free-market liberty in this country, and that’s like trying to McGyver a car out of two bicycle wheels and an empty tuna can. It ain’t gonna work.

        I have absolutely ZERO interest in any “tax reform” plan until I see some serious actual spending cuts. And I don’t mean cuts in the rate of spending increases, which is what that term actually means today. I mean an actual decrease in the dollars shoveled out the door.

  3. Bill Taylor says:

    Right now the GOP only cares about the affluent members and backers of their party. They are proving every day the congress is in session they care not one iota for the United States of America nor its citizens.
    . They asked for and received from the voters, a majority in both houses ND and the presidency. and yet they have failed to listen to the very people that voted for them. They work every bit as hard against the President as the damocraps. I believe almost all of them should be arrested, charged and tried for perjury and some should be tried for treason

    • BrianR says:

      Their fatal flaw seems to be that they eternally seek to be in power, but it’s power for power’s sake, rather than to actually advance an agenda of conservatism, the ideology they profess to represent.

      So, they make a bunch of promises: “Repeal Obamacare!”, for example, this time around. But once they’re actually THERE… ((((((((((((((((crickets chirping)))))))))))))))))

      Or some lame program like AHCA, which they CLAIM fills the bill, but actually does no such thing. We’ve seen the same SOP for decades now.

  4. captbogus2 says:

    I saw the writing on the wall when outgoing Boehner recommended Ryan to take his place and the sheep in GOP clothing went along. Why is it they ‘go along’ with the Democrats; they ‘go along’ with the Rinos and they ‘go along to get along’ with everyone except the very people who elected them???

  5. captbogus2 says:

    Maybe the people who elect them have no balls either.

  6. Hardnox says:

    I smell some extortion going on here.

    • BrianR says:

      I don’t get your drift, Nox.

      • Hardnox says:

        These guys are all angling to extort funds or favors from those parties inside and outside. Not everyone has antied up yet. That’s my take.

        Instead of doing the job they ran for and got elected to, these assholes playing games with people’s lives.

      • BrianR says:

        I’m not sure it’s even that sinister. I think they’re just gutless and stupid. That’s why I named them the PSP — Perpetually Stupid Party.

        They have an unerring knack for snatching defeat from the jaws of victory.

  7. CW says:

    This is the problem with these continually changing tax laws, Brian. People make important life decisions based upon all of these complex rules thought up by our genius lawmakers, and then the busy bees want to change the rules again. The consequence is that innocent Americans just trying to make the most of their lives and their money get totally screwed. On what planet is this “fair?”

    Paul Ryan is very invested in his reputation as the guy who makes the math work, whether it be on Social Security or taxes. That’s why he can’t be trusted. Making 2+2=4 is not the objective of the Constitution. It’s the objective of Socialists. The Constitution is about the preservation of rights, including the right to one’s income and property. A Constitutionalist says if 2+2 doesn’t = 4, that’s too bad. People will have to learn to adjust.

    There are other serious problems with the “Trump” tax plan. As I pointed out on another post, the plan is being celebrated for how “extremely progressive” it is. Not only is it antithetical to the spirit of the Constitution in its unequal treatment of American citizens, but it’s incredibly unfair IMO. It reduces the tax brackets from 7 to 3. I don’t know the exact details, but hypothetically if the cutoff between the 10% tax level and the 25% level is $100,000, for instance, that means a person making $99,000 would pay $9,900 in taxes while a person making just $2,000 more, or $101,000, would pay $25,250 or 255% more (not accounting for any standard deductions). I don’t understand how anyone can see that as reasonable or acceptable. In fact, unless the person making $99,000 is offered a raise or promotion of at least $30,000 or more he’s better off not accepting it. That’s the trouble, both philosophically and mathematically, with a steeply progressive plan.

    If my understanding of the plan is wrong, I hope someone will set me straight. Otherwise I’m with you. This is an unacceptable plan and any self-respecting conservative should reject it.

    • BrianR says:

      Thanks for that terrific and well-reasoned comment, CW.

    • The Crawfish says:

      That’s not how the tax brackets work. From your example of someone making $101,000 (after deductions), the first $99,999 would be taxed at 10% ($9,999), and the next $1,001 would be taxed at 25% ($250.25 for a total tax of $10,249.25).

      • CW says:

        Thank you for clearing that up, Crawfish. That is indeed a huge difference, and a serious misunderstanding on my part.

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