Max Rysztak: Real conservative tax policy

Monday, October 10, 2016 - 5:29pm

In every election, tax policy seems to be one of the major issues of each candidate’s campaign. Candidates often fight over the specifics of each other's tax plans, tout how their own proposals will help the most people climb the socioeconomic ladder and strive to appear knowledgeable on how these issues affect the lives of everyday Americans.

This year especially, tax policy has become a critical issue in the campaign. And while this is certainly one of the most complicated and dense issues we face, it is also one of the most important. As college students, we often rely on every paycheck just to get by. Yet with something that affects us every two weeks, we hardly pay attention to how much or why a certain amount is automatically taken out. By looking, no matter how briefly, at the actual policy that affects all of our money, we can become more educated on an issue of tremendous importance.

Given Republican presidential nominee Donald Trump’s wealth and his refusal to release his tax returns, the left has fought hard to paint Trump as a hypocrite on taxes who seeks to protect only the upper class. Conversely, Trump seeks to portray Democratic presidential nominee Hillary Clinton as a “Washington Elite” who won’t actually help real Americans.

Truth be told: Both candidates’ tax plans do not help a large proportion of Americans.

While Donald Trump’s plan severely cuts taxes for both individuals and businesses, allowing most Americans to keep more of their own money, his math doesn’t add up: His proposal would add an unspeakable amount to our national debt. The Tax Policy Center, a largely independent research institute dedicated to the research of tax policy, finds that if “tax cuts are not offset by spending cuts, the national debt would rise by an estimated 39 percent of GDP in 2026 and by nearly 80 percent of GDP by 2036.” Increasing the national debt by this amount is hardly a conservative proposal. Trump’s plan may reduce the amount of money Americans pay in overall taxes, but with such large-scale effects, he seems to propose two issues in contradiction with each other.

Hillary Clinton’s plan, however, doesn’t do any better. The Tax Foundation, another nonpartisan research center, argues that Clinton’s plan “would enact a number of tax policies that would raise taxes on individual and business income,” resulting in greater government revenue. While no conservative would argue taxes should be abolished, Clinton’s plan also doesn’t add up because it reduces the amount individuals can put back into the economy and has negative long-term effects on our economy. This uneven approach is “more of the same” and wouldn’t solve the core issues in our tax system.

So what solutions work?

Conservatives, like Speaker of the House Paul Ryan for example, have proposed many great solutions that would start to fix the entire tax structure. These are three of the most important solutions we can implement in our tax system:

Tax cuts in combination with spending cuts: Conservatives generally believe in across-the-board tax cuts, but the implementation of spending cuts is absolutely necessary when cutting taxes. When politicians cut taxes but don’t cut spending, our debt rises. Unfortunately, both sides of the aisle are currently guilty of this problem, resulting in the dramatic and uncontrollable increase of our national debt. This is a simple issue for politicians to solve: Don’t budge unless tax legislation includes cuts to government spending.

Total simplification of the tax code: We also need to simplify our tax code. With more than 50,000 pages of regulations on how Americans pay their taxes, it’s almost impossible to do taxes without hiring outside help. The mere fact that our code is too complex for our citizens, our regulators and even our politicians to understand is simply embarrassing. While this type of policy will always be extremely complicated, it’s important that we are clear, consistent and transparent when it comes to collecting government revenue. We’re even adding a hidden tax, as our system is so complicated we force most of our citizens to pay for external assistance (i.e. online, legal or professional counsel).

Encourage investment: Finally, we need to encourage Americans to invest in their own economy without fear of losing additional profits to the government. With extremely high rates on investment, the justification for risking one’s money (especially with such high investment tax rates) becomes increasingly difficult in already uncertain conditions. By allowing individuals to keep more of their investment earnings, we could increase the pace at which the economy grows and the level at which our citizens are involved.

Overall, these three ideas are not present in the current candidates’ tax proposals (at least without contradictions). The debate over taxes has been around for decades. It almost seems as if this is a problem that we will not be able to face. The left usually favors government redistribution to those in poverty and continued implementation of the current system, but the right typically argues for in a total revamp of the current structure with redefined brackets and rates. It’s clear that this isn’t an easy issue to fix. It’s obvious that there are irreconcilable differences between the two sides. But maybe if we implement real conservative proposals, different from those of President Barack Obama and former President George W. Bush, something might change for the better.

Max Rystak can be reached at mrysztak@umich.edu.