“An unlimited power to tax involves, necessarily, a power to destroy.” Daniel Webster
Tax policy isn’t about fairness, jobs or even about promoting the economy. In the current debate, it’s about who pays. Nothing more.
There’s been a lot of melodrama and hype regarding the GOP tax proposals in the House and Senate. Let’s be clear. They are different, and will require reconciliation before passage.
That said, they are both designed to turn American into an economic backwater. Just in different ways.
The Senate version hits the housing industry. Now, housing accounts for between 15 and 18% of US Gross Domestic Product. Removing the property tax deduction will push some homes into foreclosure and lead to a drop in sale prices (which in turn will put other homeowners under water and lead to more foreclosures). Putting construction workers, electricians, architects and others out of work will affect unemployment costs and state and local budgets.
It’s a simple downward spiral. If you believe economics, driving up the cost of owning a home will cause fewer people to want to own one. Which means less construction, less demand for real estate attorneys, reduced spending of furniture, etc. Ultimately, the impact will be felt by everyone, including the 1%ers who are getting a tax break and causing this mess.
However, the House version is worse. The House approach is to attack technology and technology workers — which is the future for America, if there is one. The bill makes scholarships for graduate school taxable, which will do two things:
- Make graduate school unaffordable for many Americans
- Make American schools less attractive to foreign students — and many US schools, particularly smaller and private schools are dependent on these students.
Let’s put this in context: a new report from McKinsey predicts that 30% of US jobs will disappear by 2030. If you don’t have skills in technology, you have a reasonable risk of living on welfare something in your not too distant future. It doesn’t matter if you’re a ditch digger, truck driver or accountant. There’s a good chance you’ll still need work when your job disappears.
Reducing access to tech skills at this time is the last thing America should be doing.