Republicans should give middle class another 10 percent tax cut: Earle I Mack on The Hill

By Earle I. Mack

The midterms are done and with that, America will start looking forward to the 2020 presidential election. Judging by recent events, Republicans should be very concerned. The complete decimation of the party in the Northeast, California, Wisconsin and Pennsylvania and stark demographic changes taking place in Texas and Florida are sobering trends. Notably, the sunshine state has given 1.5 million felons the right to vote. Thus, Republicans will be further disadvantaged by a state that will likely decide the 2020 presidential election.

At the same time, notwithstanding what may be a strong retail showing over Thanksgiving, dark clouds are on the horizon as indicators point to a slowing economy. Over the past weeks, the market gave back all of its 2018 gains and more, interest rates are creeping up stalling housing starts and fear of a trade war with China and possibly Europe could spell doom for the longest peacetime expansion in modern history. And finally, as we look forward to the next two years, we will have a divided Congress in Washington which means gridlock.

The 2020 presidential election could well be the Republican Party’s last stand and today we are riding into battle on Roy Moore’s horse. This is why President Trump must take action now to enact a 10 percent tax cut targeted at America’s middle class who are the heart and soul of our nation and comprise a large part of crucial independent voters.

The far left of the Democrats and the far right of the Republicans are moving in opposite directions, only by riding a white horse into the divide with a 10 percent tax cut, can President Trump save the Republican Party. This tax cut would allow Republicans to ride into 2020 and reclaim the support of suburban voters, lost in the midterm.

It is the middle class of America that needs targeted tax relief, the kind of relief that will drive the velocity of money. Putting more income back into the pockets of suburban and other middle-class voters will reignite the housing market accelerating domestic spending. When consumers buy a new house, build an addition or renovate a kitchen or bathroom it incentivizes them to purchase more goods and services stimulating the entire economy.

The clock is ticking so I urge Trump to start now. As they say in horse racing “they’re off” and it’s going to be a sprint to the finish. It is imperative to call Republican congressional leaders together today and craft a middle class 10 percent tax cut that puts money back in people’s pockets. Let’s get it done before the lame duck quacks its last.

Now everyone will ask where the money is coming from or how do we pay for it? The president can begin paying for a middle-class tax cut by embracing a few common-sense reforms to the tax code, making it fairer.

The carried interest loophole primarily benefits investment fund managers, and its elimination is one of the few campaign promises the President and Congressional leaders have yet to fulfill. The investment fund lobby yields tremendous influence in Washington, I know it from firsthand experience. I have personally spoken to our Congressional leaders who have promised many times that they would eliminate the carried interest loophole and yet they haven’t stepped up. Stopping this giveaway will go a long way to paying for a middle-class tax cut.

Almost equally important, we must eliminate tax deductions for individuals who donate lavishly to charitable activities outside of our country, perhaps with an exception of bonafide religious organizations. While there are millions of people in our country living below the poverty line and countless worthy causes here, why should the American taxpayer foot the bill for charitable donations, like saving Venice from sinking into the lagoon? Of course, we are mindful that many foreign causes are worthy of philanthropy but not a tax deduction.

We should hold our foundations to a similar standard and require them to pay a small 10 percent tax on funds spent on charitable activities outside the country. The monies received by these foundations already have been the beneficiary of the donor’s tax deduction. Taxpayer support of foundations should be limited to work done by American based charities in America, for Americans. These tax revenues could be recycled back into the American economy or the proceeds to our treasury used directly to help underwrite the 10 percent tax cut for the middle class.

The clock starts today. President Trump should keep the bloom on the rose of the economy or the “grand old party” will surely wilt.

Earle Mack served as a former United States ambassador to Finland. He was named chairman emeritus of the New York State Council of the Arts after serving as chairman and chief executive officer from 1996 to 1999.

Read the full post from Earle I Mack on The Hill: https://thehill.com/opinion/finance/418672-republicans-should-give-middle-class-another-10-percent-tax-cut