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A Taxing Situation

Having failed in their efforts to repeal and replace Obamacare, President Donald Trump and the congressional Republican majorities are moving on with plans to revamp America’s tax system. So far, at least, it doesn’t look any more promising than the previous crusade.
Which is a shame, as America’s tax system is badly in need of revamping, and the traditional Republican remedies are probably best. The system should be simplified, flattened, rid of deductions that serve only well-lobbied special interests, include more deductions that encourage investment in the broader economy, and that highest-in-the-world corporate tax rate especially needs lowering. If commensurate budget cuts could somehow be effected, so the already disastrous national debt didn’t explode, it would probably be helpful to lower every other tax in sight.
A Republican president and Republican majorities in Congress should be able to get it done, and even persuade a few centrist Democrats from well-heeled districts with big corporate donors to go along, but at this particular moment it seems a daunting task. Any attempt at serious tax reform is difficult, as all sorts of well-lobbied special interests immediately get involved, and there are lots of class resentments and economic theories to be considered, so that last time it happened was way back when President Ronald Reagan unified the Republican minorities in Congress and got more than a few centrist Democrats in well-heeled districts to go along.
This time around the Republican president is Trump, the leaders of the congressional Republican majorities inspire little more confidence, the Congressional Democrats are more unified in opposition to anything they might come up with, and the economic and political circumstances aren’t quite so ripe.
When Reagan offered his 461-page tax plan to Congress he knew every minute detail of it, and had spent the previous decades making a persuasive case to America for the sophisticated free market theories that inspired it, and with his experience as a past president of the Screen Actors Guild and two-term governor of California he knew the more down-and-dirty practical arguments to use with reluctant Republicans or potentially friendly centrist Democrats from well-heeled districts. The tax rate on the uppermost bracket was 70 percent at the time, which was steep even by the standards of the moribund European economies, cutting that by rate to 28 percent freed a lot of capital for pent-up investment in the private sector, and after the stagflation that had started in Nixon administration and lasted through the Ford and Carter administrations, most of the the country and enough Democrats were willing to roll the dice on those sophisticated free market economic theories.
When Trump unveiled his nine-page outline of how to revamp America’s tax system during a typically rambling speech in Indiana, we couldn’t shake a vague suspicion he didn’t understand a word of it. We had a hard time making sense of it ourselves, as did everyone else we’ve read, but everyone seems to agree with Trump’s opening unscripted that it does involve those “massive tax cuts” that Democrats are always accusing Republicans of yearning for.
During the speech Trump insisted the vaguely worded tax plan wouldn’t benefit himself, and he added his catchphrase “believe me,” which will surely endear him to his many lower-bracket fans, but until he releases his tax returns you’ll have to take him at his word, and by now most Americans don’t. Reagan had released his tax returns and put his relatively modest fortune into a blind trust, so he didn’t have that rhetorical problem. He could also make a case that taking a 70 percent cut from anybody who got lucky or smart enough to make it to that rarefied tax bracket was unfair, whereas Trump is stuck with a rate that went up and down and up again through the Clinton and Bush and Obama administrations and lands in a mid-30s range that strikes the more average earner as about fair. The relatively insignificant cuts proposed won’t unleash a relatively significant amount of capital into the private sector, too, and with Trump constantly boasting about how high the stock market indices and how low the unemployment rates are the populace probably isn’t in any mood for tax cuts for the rich at the moment.
Those Reagan tax cuts brought a promised doubling of federal revenue collections, but without any commensurate budget restraint the deficits and debt swelled. The broad economic expansion nonetheless continued long enough to get his vice president elected for a third term, and although a brief and relatively mild recession got President Bill Clinton he fiddled so slightly with the tax system that all that capital wound up investing in a technological revolution that has propelled the American through the desultory administrations of George W. Bush and Barack Obama and even into the era of Trump. That soak-the-rich mantra the Democrats are still loudly chanting is as stupid as ever, and we discern a few very good ideas in that nine-page outline about how to revamp the tax system, so we’ll hope for the best.
The highest corporate tax rate in the world is an obvious problem that every last Republican and at least a few centrist Democrats with corporate donors should want to solve, and there’s also a strong case to be made against estate taxes, but there was also a strong argument to be made for repealing and replacing Obamacare. Trump and the congressional leadership weren’t quite coordinated on how far to slash the corporate tax rate, both were failing to acknowledge that the actual corporate tax rate is much lower, given all the deductions their lobbyists have obtained, most of which do have a invigorating affect on the broader economy, and we can’t shake a suspicion that Trump is about to find out that tax reform is even harder than health care.
The Republican majorities in Congress are as always all hepped up for tax reform, but they have diverse districts and different donors and individual viewpoints to consider, and no matter the ranch hands Republicans are always harder to round up in a pen than Democrats. There are still a few debt-conscious Republicans left, perhaps including the Speaker of the House, some Republicans from less well-heeled districts that went big for Trump and his promises of tax hikes on the rich, and even some free market hold-outs who now worry that the tax rates are not far off from optimal. A zero percent tax rate yields zero revenues, but so does a 100 percent tax rate, and both liberal and conservative have always agreed there’s some point in between at which tax rates start to result in lower revenue, which many of our states have tried to ignore, but with Trump boasting about the great economy he’s unlikely to convince anyone outside the hated Republican establishment that his rich buddies and cabinet members need any sort of tax break.
If it we’re up to us we’d concentrate on the arguments for a lower corporate tax rate, which are so compelling they have even persuaded all of the Europeans and the Asians, state the moral case that after someone has spent a long and fruitful life paying exorbitant taxes he shouldn’t be taxed a final for dying, and not antagonize any of those lower-bracketed and class-resenting die-hard Democrats and heartfelt Trump supporters with any noticeable tax cuts for the rich, and if we were Reagan we could probably get it done. Trump isn’t at all a Reagan-esque sort of ranch hand you might have seen on the silver screen, neither are that Senate Majority Leader or House Speaker, and at this point we can’t see any of them winning over any sort of Democrat. We’ll still hope for the best, but we won’t be making any bets, and will anxiously wait to see where the Wall Street money goes.

— Bud Norman

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Smarter Phones, Dumber People

The news was slow and the weather stormy over most of the weekend, which gave us a chance to ponder some of the big-picture think pieces in the high-brow media. For the past 160 years Atlantic Magazine has been among the most high-brow of them, as well as one of the most reliable sources of ponderable big-picture think pieces, and they offered up an excellent essay about the modern age of the “smart phone” and its dire effects on its youngest generation.
It’s a lengthy and complicated article, but even if you’re not rained in and there’s another bombshell Russian story on the front page we highly recommend it. The author has been spent the past 25 years studying how Americans differ from generation to generation, with his research stretching from the 1930s to the present, and he reports on an anomalous change in the usual ebb-and-flow of cultural shifts that have occurred since 2012. That was the first year that a majority of Americans owned “smart phones,” the author notes, and when “I noticed abrupt shifts in teen behaviors and emotional states.”
The author also posits there’s a causal connection between these two things, and based on our more anecdotal evidence we think he’s on to something. He briefly and glumly summarizes all the widely-observed ways that “smart phones” have altered the daily lives of all generations — a more complete assessment would require shelves of upcoming social science dissertations and satirical novels — but finds his most alarming data among the youngest generation that never knew what life was like before the damned things. What the author calls the “Gen-I” generation reports markedly higher levels of lack of social interaction, loneliness, depression, and suicide, and links these to hours spent on texting, social media, and other time “on screen.” We’re short at the moment on very young friends, as all of our friends’ kids are all grown up but haven’t yet had kids that are even old enough for “smart phones,” and we’re proudly among the dwindling minority of Americans who still don’t own one of the damned things, but we’re not surprised by the author’s findings.
At this point we’re tempted to take some time off and write a satirical novel of our own about “smart phones,” so outraged are we with the way the damned things have made people so damned dumb. When we’re out arguing politics with our friends at the local hipster dives we always notice the attractive young couples sitting across a booth from one another and staring into their “smart phones” rather than into the other’s eyes. A conspicuous number of our similarly-aged friends lately seem frustratingly forgetful, and instead of an unexercised and flabby memory rely on their “smart phones” to tell them the name of the guy that they’re talking about. By now all of the great adventures tales would have to be re-written if they were up-dated to an age when the hero could ask the palm-sized device in his pocket for an answer, we have friends who can’t get from one place in Wichita, Kansas, to another without help from a “smart phone” global positioning system, and we don’t count it all as progress.
Shudder to think, then, what it’s like for those poor kids who can’t remember the good old analog age of actual rather than virtual reality. The Atlantic’s highbrow correspondent also provides the unsurprising and commonsensical data that children who spend less time “on screen” and more time social interactions with other children in extra-curricular activities and religious services and sports and local playgrounds, and spent their other hours with either family or books, were less likely to be lonely, depressed, or suicidal. The real world is a daunting place, but people there seem happier than the ones in the virtual world.
All the data shows the younger folks tend not to date, in the traditional sense of the term, and although that’s had a salutary effect on the teen pregnancy rates we think it’s a mixed blessing. The Atlantic reports that teens are also postponing getting a driver’s license, which would have been unimaginable to our teenaged selves, or any previous generation of red-blooded Americans, and spending way too much time in their bedrooms and worrying that the picture they posted on Instragam won’t get a self-affirming number of “likes.” The youngest of them are now tethered by a global positioning system every hour of the day and every day of the week to their parents, too, and we shudder again to think of what that must be like. We were blessed with diligently watchful parents, but we’re sure they won’t mind us saying that we’re also grateful that the technology of the time didn’t preclude those occasional moments when we were blissfully free to act according to our own better judgement. Every previous generation, after all, had those moments.
This might seem yet another old folks’ rant against modernity, but we’ve got some state-of-the-art social science data from such a highbrow publication as Atlantic to back it up, and we think there’s something afoot that’s even more significant than the next presidential “tweet.” We finally got an old-fashioned “flip phone” a while back to be constant communication with our still-watchful folks, who are now old enough to require our watchfulness, and we have to admit we’re taking up some of your own “on-screen” time, so we can’t deny that some progress has been made. Every generation has also lost something dear to every technological revolution, though, and we hope that the next one will still know something of a real-life and primal childhood.

— Bud Norman