It is obvious to most people that real tax reform means reducing taxes and government spending. However, in the current tax reform “package” there are all sorts of changes in the tax rates, tax brackets, deductions, exemptions etc. But the end result is virtually no net tax relief, little economic growth, and a substantial increase in debt. Most importantly, many people will lose valuable tax loopholes and as Ludwig von Mises said “capitalism breathes through the loopholes.”

Tax reform is really just a scam against the American people. It does help politicians reap campaign donations from special interest groups. It is an old con job because these groups can’t afford to lose their special place in the tax code. As a result, they contribute money to politicians in Congress to protect their loophole. If that does not work they start a campaign to reestablish their loophole in the future.

There are of course good items in the tax reform package such as the cut in the corporate income tax. In an ideal world, the corporate tax would not exist. Economists of all stripes recognize that it is an irrational tax because 1. It forces corporations to spend tons of money avoiding the tax, 2. It raises little revenue (only 9% of the budget), and 3. It is a double tax on corporate income because corporations pay a tax and then stock owners pay another tax on all the money they gain in dividends and capital gains.

Another promised benefit of tax reform is supposed to be economic growth, but estimates of economic growth under the House plan is just a few tenths of one percent and even that could be blown away with any kind of economic downturn.

If you do not reduce the tax burden very much, you simply do not get a big increase in economic growth. Moreover, the best way to get economic growth is to reduce government spending. Any tax reform law should have mandates that cut government spending. Spending cuts should be significant and across the board. This is especially so with entitlements because they increase the real national debt going forward from $20T to $200T. This places a great burden of uncertainty on the economy.