Accountant has answers

I just watched the one-sided speaker on KGBT channel 4 (5pm news on 12/7/17) talk about the great benefits of the Republican tax plan and feel compelled to respond.

While I do not take exception to most of what he said, it is what he ignored to say as follows, that causes me great concern.

We are going to borrow 1.5 trillion dollars in order to pay for this tax cut. We cannot keep going further into debt to keep paying for tax cuts.

Neither the 1981 Reagan tax cut or the 2001 Bush tax cut, which were made permanent by Obama have never produced a surplus but only significant increases in the deficits. (Google “US deficit by year”).

Tax rates – When I graduated from college in 1973 and joined the workforce, the top individual tax bracket was 90 percent (Senate bill brings that down to 38.5 percent) and the top corporate tax rate was 48 percent (now coming down to 20 percent in the bill).

My middle class bracket went from 35 percent to 28 percent. It is hard to ignore the fact that the rich have benefited most from these 3 tax cuts or that they pay the estate tax or alternative minimum tax which in the bill will be abolished.

If you look at the deficit since 1973 it has increased significantly after these prior 2 tax cuts. (google “US government spending” and look at debt history and chart 4.01) Politicians say that we need to get the corporate rate down to 20 % to be competitive with other countries.

What they do not say is that most other countries also have a VAT (value added tax) that allows them to keep the corporate tax rates low. Our politicians just keep borrowing to pay for the tax cuts and the spending but will not propose any tax increases or offset spending cuts.

The projected 3-5 percent increase in GNP, the speaker talked about will probably generate higher interest rates as the Fed tries to cool the economy or inflation comes roaring back.

Who cannot forget 15 percent interest rates in the late 70s, early 80s or 10 percent plus inflation in the past.

Additionally as our deficit swallows us, it is projected by GrammRudman that it will cause interest rates to rise.

Can we risk these potential impacts?

What are our kids and grandkids going to do the next time the economy is in a recession or is only growing 3 percent or less?

You cannot keep cutting taxes forever without cutting spending and thinking that it will pay for itself. Look at history and the deficit charts.

Since 1970 only one President has balanced his yearly budget for years 1998-2001 and that was a Democrat but he had benefits from the previous Republican President who raised taxes breaking his “read my lips no new taxes “campaign promise.

We need unity in politicians not division to solve this deficit problem. The speaker blamed the Democrats for being against this tax cut while ignoring Republican fiscal hawks like Bob Corker or the history of deficits after tax cuts. Most rich people do pay a lot (who knows if our President is one of these but why would he not show his returns if he did?).

I agree that tax rates were probably too high in the past and the rich should not be overburden, but we need balance in our income & expenses budget and quit increasing the deficit.

Otherwise everyone knows what happens when you keep charging on credit and never pay it down or decrease your income.

Guess who will suffer the most when that happens?

Michael Karel, Retired Certified Public Accountant Harlingen