The Fourth Way by Hugh Hewitt

Author:Hugh Hewitt
Language: eng
Format: epub
Publisher: Simon & Schuster

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The Free Market Flourishing

There’s a Fourth Way on tax and entitlement reform. I’m not a “tax reform” guy. Never have been. Never will be. I know it floats a lot of people’s boats, that endless discussions roll on and on about marginal tax rates, and that Grover Norquist has spent decades collecting cards with signatures on them committing the signers to never vote to raise tax rates. The federal tax scheme was overhauled pretty well by Ronald Reagan thirty years ago and it really isn’t that bad, except for the corporate tax rate, which is insane, and the death tax, which is immoral. Specifically, the death tax is immoral when applied to financial legacies of less than $100 million dollars.

On the subject of tax reform, I sought out the views of my trusted friend Hank Adler. Hank and I wrote the book The FairTax Fantasy. Hank was a tax partner at Deloitte & Touche until he retired in 2003, and has been teaching accounting to college kids since then for fun. (Don’t ask me to explain that. Like tax lawyers, tax accountants enjoy their work.) He’s a public-spirited man and a savvy board member of big concerns. He has spent his life working through the consequences of various “tax reforms” and “tax cuts.” He’s very practical.

I want to begin this chapter with an appeal to the tax wonks of D.C.: get your heads out of the editorial pages of the Wall Street Journal, please! Real people don’t live there. They live in high-tax states, in three-bedroom homes that are the centerpiece of their families’ lives. They go to churches that they support with tax-deductible contributions. They live in communities anchored by institutions like hospitals and colleges that depend on very large tax-deductible contributions. The purists at the Wall Street Journal want to end all deductions. They want a flat rate, and they are steeped in a world of efficiency and non-distorted economic decision-making, whereas most Americans live in houses they love surrounded by families they’d like to see prosper.

Most tax theorists, but especially the purists of the “Austrian school,” wouldn’t mind condemning most Americans to a life of economic upheaval if they could just have their way on crazy ideas like eliminating the mortgage interest deduction. I understand they read books by Austrian economists and attend seminars where everyone nods in agreement about the need for ending market distortions. But politics says they are nuts.

People like their homes. They bought them on the promise of the mortgage interest rate deduction and they made life decisions to stay in high-tax states based on the deductibility from adjusted gross income on federal tax returns of state income taxes. They give to their churches, the Salvation Army, Catholic Charities, United Way, and the Injured Marine Semper Fi Fund in part because the donations are tax-deductible. Mess with the tax code because you are in love with theory and you end up with a political wipeout.

President Trump understands this because, once upon a time, he and his father built housing for people in the middle class.

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