News from Nov 13 points 1 and 2

Point One – Kamala lost the election the way Hillary did, by focusing so much on abortion that Swing State Catholics who are on the edge went the other way. Some are pro-life, some are pro-choice and the mushy middle swing – particularly in the Midwest. In 2008, I got a message to Alice Germond, who I had worked for at NARAL, to not let Barack focus on abortion. They took the advice and Obama got elected – promising to begin talks on late term abortion rules beyond the extant law. To prevent any compromise, the Bishops retaliated with the FOCA hoax to build up their mailing list for 2010.

In 2016, the Catholic bishops conspired with Trump, who conspired with the Internet Research Agency to get and exploit Hillary’s views on partial birth abortion. Hillary should have said, when asked, that Partial Birth Abortion was already illegal. She did not – rather she justified why it might be important. Oops.

This year, too much attention was spent on getting the liberal women she already had, rather than explaining that Trump’s policies put too much money into the hands of higher income individuals, who had the juice to outbid everyone else for food and housing. Voters would have understood such an explanation. This would have been a great time to mention that Manchin and Sinema had blocked ending the Trump tax cuts – so the 2024 economy was his, not Joe’s.

Just today, the government announced that inflation is up. This statistic measures what was happening in the period of time just before the election. Oops again!

Point Two Today the Republicans officially took the House. Just as home prices and the stock market are topping – largely due to the 2018 cuts. Congratulations, you caught the car. The only way to get things back on track is to deflate the speculation sector (or have the Fed put so much credit into circulation to sink the dollar) – and the way to do that without hurting the economy is to increase tax rates on capital returns (dividends, interest and pass-through income) and on gains. 

If the Republican Party wants to repay its voters, it needs to grow the consumer economy.  Higher taxes on capital will do this on its own. To do more, increase the minimum wage. In 2021, the GOP offered $10. $13 has the same purchasing power – $14 if the workday is shortened to 7 hours and the week to 4 days. This will get discouraged workers off the couch and their parent’s basements. 

The main thing on the agenda is tax reform. Increase the child tax credit to what VP Harris proposed – either in the lame duck so that she can sign it twice (as President of the Senate and then as President when Biden retires early). President Trump doubled the child credit in 2018. Families need it to double again and become refundable. 

It won’t be inflationary. Inflation follows the 90th percentile – not the working class. Giving the working class more money to spend will lead to more spending but not more inflation (until this leads to higher profits – and it will).

We have all of 2025 to work on the rest of tax reform. With both houses and a White House staff which will let Trump have a seat at the table, we need to give it to him. Job one is to get everyone behind a Goods and Services Tax instead of Tariffs – because giving the President enough control over the agenda to end his go-to practice of exercising power in the one way he could in the age of Pelosi. 

If part of enacting a VAT is removing the requirement for personal income tax filing for the vast majority of American families, - as suggested by Michael Graetz, the GOP will reap the benefits of those optics. Channel the child tax credit through wages by including it as an offset to an additional net business receipts tax, aka the Japanese subtraction VAT – as suggested by Lawrence B. Lindsey. Any additional surtax on higher rate individuals can be channeled through this tax. After the offsets to the tax for family income and health care coverage and reform, the surtax could top out between 20 and 26 percent in net revenue gain. To pay down the debt, sell tax prepayment bonds to either high income individuals or their employers – as I suggested to President Reagan and Senator Jepsen in 1984 as I was coming to DC as an intern. 

The only fly in the ointment is capital gains taxation. To transfer collecting this revenue to employers would require more disclosure than anyone wants their CEO or Board of Directors to know about. The alternative is an asset value added tax, which would also end the death tax entirely, although asset sales would be marked to market if sold after inheritance -but zero rated for ESOP sales.

Call this all the Fair Tax, option 2.0, which ends the need to restart Welfare to give money to poor households rather than including it with pay through the NBRT. If the states collect the credit invoice and subtraction VATs and the SEC collects the Asset VAT, Trump will be known as the President who abolished the IRS.