Editorial

Cut Taxes, Reagan-style

Wednesday, November 8, 2017

What hasn’t happened this week?

It started on Monday with special counsel Robert Mueller’s opening round of indictments, chief of which were charges of fraud and money laundering against Donald Trump’s former campaign manager and shifty big-time lobbyist, Paul Manafort.

The charges against Manafort, which predate his three-month stint with the Trump campaign in summer of 2016, made headlines but were no surprise to anyone, especially me. (I had been telling people for years that Manafort was dirty, but unfortunately no one doing the hiring in Trumpland took my advice.)

Then on Tuesday afternoon came the horrible news of the attack by an Isis-connected terrorist who used a rented truck to murder eight people on a bike path in New York City.

Mueller’s indictments and the terror tragedy both overshadowed what should have been the big news of this week -- President Trump’s big push for a massive tax reform bill.

But on Thursday Republicans in the House unveiled the first draft of their “Tax Cuts and Job Act” -- all 429 pages of it.

It’s still horribly complicated, full of politically controversial features and debatable deductions, and liable to be rewritten as early this weekend.

There are far too many politicians and interest groups pulling and pushing and whining for their special deals -- whether it’s the home builders and real estate people complaining that it would hurt homeowners or Senator Rubio moaning about the insufficient hike in the child tax credit.

In its present fluid state, it’s not worth praising or criticizing the specific pluses or minuses of Trump’s “historic” tax reform bill.

One thing for sure, though, it’s not going to happen quickly or easily, no matter how many times they invoke my father’s name.

For years whenever Republicans dreamed out loud about reforming the income tax or simplifying the tax code they’d say it was going to be the largest tax cut since Ronald Reagan did it in 1981.

Nothing ever came of their big talk about tax cuts, but when Republican tax-cutters use my father’s name I’m often reminded of a conversation I had with him about confiscatory income tax rates in 1954 -- when I was about nine years old.

It sounds crazy or made up, but it’s true.

As I detail in my 2016 book “Lessons My Father Taught Me,” when I rode with my father to his ranch in Malibu on Saturday mornings, it was like going to school.

I’d pepper him with questions and he’d always answer them, plus he often gave me answers to questions about politics or economics that no nine-year-old ever thought of asking.

One day I asked him a simple question -- would he double my allowance from a dollar a week to two dollars?

For the next 15 minutes my father decided to tell me about the workings of the income tax system in America.

At the time I felt like it was my penance for daring to ask my selfish question, but I’ve always remembered what he said.

He told me -- and this was around the time he was hired to host “General Electric Theater” on TV --that he was paying about 90 cents out of every dollar he made in Federal income taxes.

Then he said something like, “With the 10 cents I have left, I have to take care of your mother Jane and you and Maureen, and my new wife Nancy and our daughter Patty, the house we live in, the ranch, the foreman, the horses and the cows.”

By the time he ended his tax lesson I felt so sorry for him I offered to give him back half of my allowance.

“Michael,” he said, “you don’t have to go that far. I’ll make you a deal. When there’s a president that cuts my income taxes I’ll increase your allowance.”

I took the deal. I didn’t know a Democrat from a Republican, but at age nine I knew the difference between more money and less.

In 1964 Lyndon Johnson got the tax cuts through Congress that John F. Kennedy had been pushing before he was killed, dropping the tax rate of the top income bracket from 90 percent to 70 percent.

Still not much of a bargain, but my dad, as promised, increased my allowance from $1 a week to $5.

I was no longer nine. I was 18. But at least by that time I had learned to play poker and I was able to increase my $5 mightily on weekends.

The point was that my father kept a promise to me and taught me a lesson that has national implications -- “When I get a break in taxes you get a bigger allowance.”

That’s really kind of how the American tax system works and it’s really never not worked that way.

I think about what my father said when I hear the politicians debating whether they’re going to allow those of us in California or New York State who pay a very high state income tax to continue writing that tax off on our federal returns.

Or whether we’ll be able to still deduct what we pay in property taxes on our homes. Or how much the standard deduction for a couple will be.

Today’s tax-cutters need to remember that when my father signed that bill to cut federal taxes in August of 1981 he didn’t play political games or create special deals for certain special interests. He cut taxes for everyone across the board.

So, tax-cutters, if you are going to use my father as the shining star of tax reform, then use him correctly and cut everyone’s taxes.

And don’t punish the people who’ve been most successful with higher rates, because if you do they might never be able to give their child or grandchild that increase in their allowance.

Copyright 2017 Michael Reagan.