Fairness for all, not for a few, must guide federal tax reform

The new fight begins. 

Tax reform.

Everybody is in favor of the concept. Yet “reform” definitely means different things to different people.

The hallmark of this proposed and supposed reform should be summed up by one word — fairness.

We have a tax system in this country that theoretically values fairness and inherently strives to be progressive. But some of the GOP proposals are in no way fair or progressive.

{mosads}Let us start with the most odious Republican suggestion.

For years the GOP has fiercely advocated for the elimination of the federal estate tax. They have sought to control the language by repeatedly calling it the “death tax.” They think that has a nice ring to it.

This is bogus and absurd. Here are some facts.

Individual estates are taxed at a rate of 40 percent, but here is the essential matter: The very first $5.49 million is exempt from any taxation. So who wins? A mere 5,400 U.S. citizens.

The Republican Party is the constant champion of 5,400 very rich Americans. The 320 million other Americans don’t qualify for this tax break.

Another tiny sector of the population is also hugely advantaged by our tax laws. They go by the title “hedge fund manager,” or the fancier moniker, “private equity executives.”

They charge management fees for moving around billions of dollars for immensely rich individuals and institutions. These people do very, very well. A great many of them are billionaires themselves.

The fees they charge are innocently called “carried interest.” A cute term which defies meaning and has as its purpose to confuse and bewilder the average reader.

I don’t know how they came up with this term. But the words successfully hide what’s really going on.

The income which these mega-rich guys gleefully garner is taxed not as income but as “capital gains.”

Capital gains are taxed at a much lower rate than ordinary income. This “carried interest” is a giant giveaway to the very richest people in our country.

You might remember that one Donald J. Trump talked about “carried interest” and all its evils during his “populist” campaign. Let’s see if he backs up his words with concrete action. Was he really serious about doing away with this grotesquely unfair contrivance? 

“Carried interest” should be eradicated. Billions of new dollars would be added to the federal coffers by its elimination.

The administration seems to be sending out signals that it wants to repeal the deduction for state and local taxes paid by individual taxpayers. This would drastically harm the average taxpayer.

David Snick, in a recent Wall Street Journal op-ed piece, called for the opposite. The former chief of staff to the late congressman and tax-reform champion Jack Kemp (R-N.Y.) pushed for the standard deduction to be tripled. This proposal would surely help the little guy, and that should be the over-arching goal.

One very popular item in our tax code is the mortgage interest deduction. Democrats don’t want to tamper with this item. They are wrong and its elimination should be included in any comprehensive tax reform bill.

Supposedly it is an incentive for home ownership. But what about the millions of renters who receive no such deduction? The elimination of this item could supply billions of dollars that could be used to stimulate and provide affordable housing.

This issue is talked about but it desperately needs federal funds to become a reality.

If the GOP continues to advocate just cutting corporate and individual personal taxes and not closing loopholes for the powerful and rich, this entire exercise will be nothing more than a sham.

Everybody will have to sacrifice some of their benefits and favored exceptions. The pain should be applied to every constituency.

I repeat — fairness should be the mantra of tax reform. If it does not meet that standard, it should not be included. 

The tax system in the United States is perceived as a giant mess that only those with creative accountants can truly master. That has to stop.

The serious work should begin and the final product, when completed, must be bipartisan and fair to all.

Mark Plotkin is a contributor to the BBC on American politics and a columnist for The Georgetowner. Previously, he was the political analyst for WAMU-FM, Washington’s NPR affiliate, where he co-hosted the “D.C. Politics Hour With Mark Plotkin.” He later became the political analyst for WTOP-FM, Washington’s all-news radio station, where he hosted “The Politics Hour With Mark Plotkin.” He is a winner of the Edward R. Murrow Award for excellence in writing.