Why Tax Reform Is So Very Much Needed For The American Middle Class

The American Middle Class is dying and without a strong and thriving Middle Class, there is no America.

Whether you are politically right-leaning or left-leaning, on that we should all agree.

The current tax code stifles innovation, progress, and upward mobility. It hasn’t been reformed in nearly four decades.  The time for reform is now before it’s too late.

Let me share a few quick facts to emphasize that point:

***Over the last decade the highest annual GDP rate was a paltry 2.5% in 2015. By contrast GDP was as high as 7.3% in 1984. That difference equates to millions and millions of jobs, which in turn creates more tax revenue, more innovation, and most important, far greater opportunity for all Americans.  2.5% doesn’t even keep up with population growth. What that means is more and more people are joining the ranks of the unemployed which in turn means they are being supported by the fewer and fewer who are working. That is unsustainable. If not corrected, total economic collapse is inevitable. None of us wants that.

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***In 2016 home ownership hit an all-time low. Historically, home-ownership has been a foundation upon which the entirety of the Middle Class was built upon. That foundation is now crumbling at an alarming rate. We are becoming a nation of renters. (No offense to renters intended!) More renters means more money is controlled by the landlord class and the gap between the haves and have nots increases even more. One of the single greatest vehicles for upward mobility in this country regardless of race, religion, gender, or sexual orientation has been home ownership. That great equalizer is now greatly diminished.

***Middle Class minorities have been hit particularly hard. In 2007 the unemployment rate for Hispanics was 5.6% and for blacks it was 8.3%. In 2016 those rates were 12.1% and 14.8% respectively. The link between Middle Class success and minority success is undeniable. Each version of success requires the other. For the last ten years that hasn’t happened. Millions are suffering. Too many have already given up hope.

The White House and some members of Congress are proposing a corporate tax rate of 20%, a reduction of tax brackets, and a general simplification of the code. Those proposals are a reasonable start to negotiations but many details remain to be worked out. There are already some who are pushing back against the proposed cut to the corporate tax rate, equating “corporate” with the wealthy. That isn’t an accurate claim, though. 70% of the corporate tax burden is currently born by workers and consumers. It is a regressive tax that is most often passed along to those who can least afford it. That’s how such taxes work. They always have and they always will. A reduction in the corporate rate is both good and needed – and long overdue. Bring jobs back to America. Keep more jobs here and create millions of new ones for the working Middle Class.

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As for the simplification of the tax code, yes-yes-yes! BEWARE, though of allowing that simplification to actually lead to a greater tax burden for Middle Class families. The current batch of proposals come dangerously close to doing just that.  NO-NO-NO! Keep the special-interest cut outs and the partisan hackery out of the equation – please! Saving Middle Class is not a “Republican” thing or a “Democrat” thing – it is an American thing. One that benefits every one of us.

Let’s see if D.C. can come together for the first time in a very long time and get something done that is so very much needed.

Tax reform now. Tax reform for all.

-DWU

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