Frank Bernheisel: The View From Here
Frank Bernheisel
Frank Bernheisel
Posted 05.14.17
Just Outside Washington


The President's Tax Plan

To: Senator Tim Kaine, Senator Mark Warner and Representative Don Byer, of Virginia

President Trump has proposed a plan to overhaul the tax code. I think that this effort is timely. Overall, he proposes to reduce taxes. His plan for individuals proposes to eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers and to repeal the Alternative Minimum Tax are good ideas, but insufficient.

The President's plan also proposes changes to the business taxes, including a 15 percent business tax rate, a one-time tax on trillions of dollars held overseas, and elimination of tax breaks for special interests -- not bad, but hardly solving the overall problem.

The primary problem of the Trump plan, loss of revenue, is addressed by the "border tax" -- this is a bad idea. I suggest two alternatives, in order of my priority: a carbon tax and a value added tax (VAT).

Many in Congress complain about the federal debt, and they do nothing but complain. Either of my alternative taxes has the potential to generate revenue sufficient to cover revenue losses elsewhere and to begin to reduce the federal debt.

President Trump's plan talks about elimination of tax breaks, which is a good idea. The President also talked about supporting religious freedom. I propose that we combine these two concepts by eliminating the charitable deductions for all tax payers and eliminating the tax exemption for churches and all other non-profit entities. This change would treat all organizations equally and allow them to participate in public affairs, equally and without government interference. An added benefit of this approach would be a great simplification of the tax code and its enforcement.

The concept that a tax cut will grow the economy and increase tax revenues, as exemplified by the Laffer Curve, is laughable. Unfortunately, President Trump and many in Congress seem to believe this unproven concept. I think the most glaring example of the failure of this concept is President Reagan's tax cuts, which he was forced by circumstances to reverse.

I urge you to support revisions to the tax code, which will stabilize revenue, help reduce inequality, and simplify the code.