Trump tax’s troubling tract – part trois

November 10, 2017 11:39 AM

As noted in previous posts of the same name (the original on September 29th and part deux on October 12th), more extensive developments on the Republican tax reform plan were likely to provide a view on whether they have any chance of success. At this point, it still seems more of the same old ‘great plan’ promotion (ala health insurance reform) with an inability to garner enough support within the Republican Party to pass the plan into law on the assumption there will be zero assistance from the Democrats. While we will explore other recent weaknesses in the tax reform proposal, one of the stubborn aspects that has plagued it from the beginning is the elimination of individual taxpayers’ SALT (state and local tax) payment deductions from federal tax returns.

We have already reviewed many aspects of this in the previous posts noted above, and refer you back to those for extensive details including important graphs on the SALT issue. Of special note is that this issue caused 20 high-tax state Republican representatives to vote against the recent passage of the budget that cleared the way for streamlined tax reform (i.e., passage by a simple Senate majority vs. the normal 60 votes.) As we shared earlier, in voting against the budget Peter King (R-NY) mentioned he knew of many more Republicans who objected to that key SALT deduction elimination who only voted for it in order to advance the process.

Next shoe to fall

Well, the next shoe has fallen in the form of prominent Republican California Representative Darrell Issa now saying prior to any of his California Republican cohorts that he cannot vote for the tax reform legislation in its current form. And he is no average representative. He was the co-head of the Benghazi Committee investigating the failures of Secretary of State Clinton and the State Department, and was aggressively promoting more extensive investigation of Clinton’s email problems.

And indeed he specifically cited the SALT deduction elimination as one of the key factors in his decision. Yet this is just one recent development, and there are more that get us back to a topic regarding the U.S. Congress (and other countries’ legislative bodies) that they repeat the same bad ideas in spite of the consideration that they should know better. The old saying is that bad ideas never go away in Washington DC, they just wait long enough for people to forget how badly they failed before coming back into vogue.


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About the Author

Alan Rohrbach is Lead Analyst and President of Rohr International, Inc.  He is an international equity index, interest rate and foreign exchange trend advisor. His forte is ‘macro-technical’ analysis of how fundamental influences blend with technical aspects to drive trend psychology. Clients include international banks, hedge funds, other portfolio managers and individual traders.