The House tax bill is an all-out attack on the future prosperity of America, not that any of the major news organizations are telling you that in plain English. Lost in the dense bureaucratic language of modern news reports is the simple fact that the House bill takes from striving students so that the already rich and major corporations can have more.
This bill is a long-term disaster in terms of what economists call opportunity costs. That term refers to a benefit that a person could have received, but gave up, to take another course of action. This tax bill gives up the future wealth from investing in brainpower in favor of permanent tax cuts for the already rich and corporations.
This tax bill should be called the Intellectual Destruction Initiative Outrageous Tax Savings Act, a.k.a. the IDIOTS Tax Act of 2017.
Are we idiots?
What we need is more investment in education and, especially, education of the most serious and scholarly students. I have a name for what we need — the Intellectual Quality General Education National Investment University Scholarship Act or IQ GENIUS Act.
What will we tell our Congress, if anything, about this tax bill and the one being written in the Senate? Hopefully, it’s that we are not idiots and we want to develop more genius minds.
The House bill would eliminate a 2015 law that lets teachers who itemize deduct some of the money they spend on school supplies and materials not provided by their employers. In 2014, almost four million teachers deducted an average $254 each, IRS Table 1.4 shows. Nearly all of the deductions were taken by teachers whose tax returns, which can cover two people if married, had a total income of less than $100,000.
The IDIOTS Act also ends tax-free education benefits for the children of long-term college employees. The House GOP bill would eliminate Internal Revenue Code Section 117(d), which allows these benefits.
“Fifty percent of employees receiving tuition reductions for themselves or family members earned $50,000 or less, and 78 percent earned $75,000 or less,” according to the College and University Professional Association of Human Resources.
In simple terms, here is the bill’s message to the poorly educated person who works in the college cafeteria so that their child may attend college: “Tell your kids plan on a career in the cafeteria.”
Even worse is the plan to eliminate subsection (5), which allows “a graduate student at an educational organization … who is engaged in teaching or research activities for such organization” to get tuition waivers and stipends tax-free.
Taxpayer money now invested in developing knowledge would be shifted to giving massive tax breaks to heirs of the already rich and to the 3,000 corporations (out of 6 million) that own more than 80% of all the business assets in America.
And all so that couples with one family jet can afford, his-and-her private jets, like gambling mogul Sheldon and his wife Miriam with their twin personal Boeing 747s, as I revealed in my book "The Fine Print." With their tax savings, the Adelsons would be able to upgrade to personal Airbus A-380s, those double-decker jetliners are built in France.
The most valuable asset in America is not factories. It is not formulas for making drugs or the algorithms that make the Internet work. Our most valuable asset is the gray matter between the ears of young people. A mind is a terrible thing to waste, but a wonderful thing to invest in, says an old slogan from the United Negro College Fund. Congress just doesn’t get it.
And the return on that investment rebounds not just to the individual, but to America and the world. My proposed IQ GENIUS Act should be thought of as the 21st Century G.I. Bill for all who will study, study, study.
We should be investing more in young minds, from birth through the highest level of education that serious students desire, not less. That is what China and other countries with an eye to tomorrow are doing, while our Congress looks at today and yesterday.
And the way to recoup that investment is through taxes on the higher incomes of those with advanced educations. Some will make little, many much better than average incomes and a few will become as rich as the Adelsons — and by taxing their fortunes society gets repaid for its investment while at the same time growing ever more prosperous.
When the American education system was developed in the late 19th century it focused on reading, writing and basic arithmetic. It was designed to produce workers for the industrial era — in good measure compliant drones who would do as they were told. It was also cheap, especially when most teachers were women because other job opportunities for women were few and the pay was miserly.
But the economy of today and tomorrow depends on a host of sophisticated skills — creativity, thinking outside the box and critical judgment — that were not so valuable in the Industrial Age. That costs more, but it also produces bigger rewards.
Only by rigorously developing critical thinking skills, a deep understanding of mathematics and statistics and recognizing the nature of science can America continue to prosper. Intense education is the fundamental building block of America’s economic future. Keep in mind that arguably the most successful investment taxpayers ever made, the G.I. Bill, helped produce the enormous increase in wealth today compared to 1940. Indeed, we would have more wealth had more GIs been able to take advantage of the bill, especially African American GIs and women who were clearly discriminated against in its implementation.