Tax reform: Is it going to happen? If so, when? This morning in our Delivering Alpha conference, we listened to Treasury Secretary Steve Mnuchin talk about how we are going to get tax reform and get it this year.
First, understand that I am a huge believer in tax reform. We need companies to be able to repatriate their assets into our country, something they have been loath to do because our corporate taxes are way too high and totally uncompetitive when it comes to the rest of the world.
Plus, a lower tax code could be a total boon to so many domestic companies that could take that money and expand to hire more people, something I believe could actually lead to higher revenues for the Treasury given the growth it would spur.
But I am a realist.
At the time of the inauguration, I could not have been more excited about these changes.
But not anymore. I know better. First, as Secretary Mnuchin said, we got sidetracked on healthcare reform, something that we all thought was a done deal given the endless repeal-and-replace rhetoric we kept hearing about right into the election.
They couldn't do it. An abject failure. A total waste of time and momentum.
Second, then we had to deal with the insistence of Congress on the notion of a border tax as a way to fund the tax cuts the president was suggesting. It took endless wrangling to try to figure out how to get that done, and ultimately it was scrapped because it would have hurt so many importers and cost perhaps millions of jobs.
Then this morning we heard about the desire of the Treasury secretary to change the taxation of the pass-throughs, certain business partnerships that could benefit from a change in taxes. The administration also wants to eliminate state and local deductions to pay for its plan.
All I can say is here we go again.
I, like many of you, want something to get done. The best way to get it done is to keep it simple. Why the president's people don't see this is beyond me, but they are going down the exact same path that failed President Obama. The Democrats wanted comprehensive reform. Now the Republicans want comprehensive reform.
But if you want something done, just do it. Cut the rates for the middle class and use the repatriation -- which could be a huge cut on the trillions that are overseas even at a reduced rate -- then watch the economy grow.
Same thing with infrastructure. We are all sick of how our roads and bridges and tunnels are falling apart. Offer us savings bonds. We will buy them. We will do it because we are patriotic and practical.
But if you want to go all complex, so complex that the people will not understand it and the interests will muck it up and the Republicans will fight with the Democrats and with each other?
Then forget about it.
There was a time when I used to ask each executive what he or she is going to do with the money they will get with a lower corporate tax rate. How much will be put into dividends, buybacks, new jobs, R&D. How much will be brought back from overseas.
I don't even bother anymore. You know why?
I don't want to waste your time. Because doing it this way, going about it the way they are, ensures failure. Great is the enemy of good. And great's winning, so we will all end up losing in the end.