MORE HERE:
[EXCERPT]
The House passed a budget resolution on Tuesday evening in advance of the March 14 deadline to avoid a government shutdown.
The bill passed in a 217-215 vote with all but Republicans except Thomas Massie (Kentucky) voting in favor. Leading up to the vote, some swing-district Republicans expressed concerns about possible cuts to social programs, while others were hesitant about the potential to balloon the deficit.
Trump has dubbed the resolution, which would extend tax cuts from the 2017 Tax Cuts and Jobs Act, and remove taxes on overtime wages, tips and Social Security benefits, a “big, beautiful bill.”
With the passage of the bill, a reconciliation process will start where House committees will cut or increase spending while trying to offset the trillions of dollars that tax cuts are predicted to add to the national debt. The process also restricts amendments and avoids a Senate filibuster from Democrats.
It’s a mixed bag, but it’s a start.
On the tax side, there are several things that should be rethought — and doing so would significantly improve the package both in deficit reduction and basic tax fairness. Eliminating income tax on tips, overtime pay and Social Security is wrong on all counts.
The tip income is chump change, although compensation norms will adjust to take advantage of a major new loophole. I told my dentist just last week that I would be happy to switch over to a tip based compensation model. He has his head screwed on straight; he grinned and said he’d be all-in.
Social Security? In a fair tax system, all income should be treated equally. Social Security is an intergenerational transfer scheme, not a savings based program. Of course Social Security benefits should be taxed — as should all welfare payments of any kind. Genuinely low income people will be below the zero bracket amount and, in the end, not have a tax due, but they should at least have to sum it all up and report once a year like the rest of us do. It would have an important educative effect, and it would help screen out the scammers.
Eliminating taxation on overtime wages is disastrously wrongheaded. Given the ongoing changes in the nature of work, the evolving work from home option, lifestyle changes, etc., we clearly need much greater flexibility in labor markets. A great many people would happily trade lower wages for reduced hours and greater flexibility, and if this were enabled, the effect would be to increase the number of jobs available to those seeking employment. Making overtime pay tax exempt will induce a preference for overtime, which will appeal especially to young people not yet saddled with family responsibilities. Want a tax change that sabotages family formation? There ‘ya go. I’m all for letting people make their own choices, but why should we create a huge new preference for worker drones who prioritize ever-longer hours? Why boost unemployment to create legions of people in their 20’s and 30’s who will be bribed to prefer 60 hour weeks?
Since these three categories of income are currently taxable, just leave them alone. That is not raising taxes on anyone. Take the existing revenue streams from which Trump wants to walk away and apply those funds to deficit reduction. Or give them back to taxpayers in ways that increase fairness and broader social objectives: cut our excessively high marginal tax rates in the higher brackets; expand the child tax credit for married families with children.
Yes to the spending cuts and reductions in the scope of overreaching government. No to an ill-thought tax package that was the product of naked pandering in the campaign. That can still be done, very easily, at this stage. Listen to the deficit hawks, the supply side economists who want to grow the economy by lowering marginal tax rates, those seeking to encourage a marriage culture and children. Why work Americans to the bone, and make up for our below-replacement level fertility rates through high immigration? Elon Muck — an immigrant himself with 12 children, most illegitimate, scattered among multiple baby mommas (worse than most NBA players) — thinks this is a good idea, but as useful as they may be on some issues, I wouldn’t take Donald Trump’s or Elon Musk’s guidance on marriage and family.