Notes on the “Tax Cuts and Jobs Act”

The Tax Cuts and Jobs Act, commonly known as the “Trump tax cuts,” is a flawed piece of legislation by Parliamentary standards. As I found out, its lack of popularity outside the Monroean Faction (Read: Republican Party) was a strategic risk by the Monroeans to cater to the Trump supporters who voted for Trump in the 2016 Presidential Election. The Monroeans in charge of the 115th US Congress at time wanted to consolidate their electoral gains in 2016 by providing concessions to the Trump supporters in hopes of converting them into future “Republican voters.”

The problem was that these Trump supporters, a sizeable majority of whom hailing from the Rust Belt and Midwest states, voted for Trump out of disillusion with the Madisonian Faction (Read: Democratic Party). Their local communities and state governments were governed by the Democrats when the Deindustrialization of America occurred around the Death of Bretton Woods in the 1970s. They accused the Democrats of failing to do enough to help them recover their economic livelihoods after Deindustrialization. Disillusionment turned to resentment when the Democrats, in response to the Reagan Revolution of the 1980s, abandoned the New Deal tradition and adopted Neoliberalism. This occurred during the Clinton Presidency in the 1990s.

The Trump supporters who helped Trump gain the Presidency were low-income, working class Americans. Under pre-Trump political conditions, they are not the kind of people who would become sympathetic to the Republicans. They would have voted for another party if there was one. What these people wanted most was to regain the old socioeconomic systems that enabled them to participate in the political-economic life of these United States. In fact, they wanted the Republicans to embark on an industrial policy that would reverse the trends of Deindustrialization or at the minimum alleviate the US trade deficit with Mainland China.

Rebelling against the Democrats and voting Republican, the Trump supporters in those parts of America hoped that Trump will dissuade the Republicans from their free trade, free market policies. The Monroean Faction will develop an Economic Nationalist perspective, advocating for the “reshoring” of US manufacturing and the expansion of employment in that Economic Sector. The American heartland will be revitalized, the communities ruined by decades of Deindustrialization resurrection from their languishment. At least, that was what the Trump supporters had anticipated.

The reality is that not all of the Republicans, even when Trump and his supporters managed to take over the Monroean Faction, refused to abandon their free market, free trade positions. Instead of passing an industrial policy in Congress, the Republicans decided to accommodate the Trump supporters within the framework of an unconventional tax policy. The Tax Cuts and Jobs Act was the result of the Republicans trying to cater to those Trump supporters without ever having to fully adopt any Economic Nationalist positions.

Many of the proposals that were included in the TCJA either backfired or fell short of their expectations. As convenient it would be for us to support the popular media narratives, the simple idea that it “benefited the wealthy over the working class” does not adequately address the crux of what the TCJA sought to implement.

The key areas of interest in the TCJA included the “SALT Deduction,” attempts to address the “Double Taxation” by the Federal and State governments, a transition to the “Territorial Taxation System,” and “repealing the Individual Mandate” of the Affordable Care Act. From my understanding, the Republicans who passed it in Congress thought that those reforms would encourage private investment and expanded employment in the US Manufacturing Sector. They would help the Trump supporters find employment in a manufacturing-related Profession, obtain healthcare as part of being employed in those Professions, and earn more Kapital that they would then spend in their local communities. The new Kapital will increase their livelihoods, bring much-needed economic growth to their communities, and make their Rust Belt and Midwest States more competitive compared to the rest of the Union.

To ensure that the Trump supporters got what they wanted, the Republicans issued Incentives to Corporate America, particularly those that qualify as “Multinational Corporations (MNCs).” The Incentives implored them to invest in the Rust Belt and Midwest States by “reshoring” the Kapital earned from their overseas branches within other countries. The reductions in Corporate Income Taxes were intended by the Republicans in Congress to be reallocated toward the employment benefits of existing employees and expanding employment opportunities for others. It should be noted that the TCJA benefited certain US Industries more than others. Obviously, the US Manufacturing Sector reaped the greatest rewards from those arrangements.

The real problem with the TCJA is that it tried to pour new wine into an old wine bottle. The Incentives for “reshoring Kapital” were for whatever reason Perverse Incentives for “offshoring Kapital.” America had achieved a hybrid between the Worldwide Taxation System and the Territorial Taxation System. There were no guarantees that the US Manufacturing Sector would invest its Kapital in the Rust Belt and Midwest States. And, if their votes for the Biden Presidency in 2020 was any indication, some of the Trump supporters were not well-informed enough on how the TCJA improves their livelihoods, let alone revitalizing the American heartland.    

Why did the TCJA fail to appeal to the Trump supporters in the American heartland? Its failure did not help the Republican majority maintain their control over Congress in the 2018 Midterms nor did it prevent the 2018-2019 Federal Government Shutdown from occurring. The Republicans at the time were making a huge risk by trying to appeal to them.

As I found out, the legislation history of the TCJA revealed a lot of “drafting errors” in its conception. Not enough attention was given to rectify the number of flaws in the legislation. In fact, when the TCJA was still in the process of being passed, the Republicans chose to consult the expertise of the Treasury Department instead of working with the Democrats. While the Treasury Department did fix some of the errors, others were left in the final bill because the legislation was more or less rushed in preparation for reelection in the 2018 Midterms.

That’s all I had to write about the topic. At some point, I am planning to share some of the sources in the near future if anybody is interested.

Categories: Politics

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