Treasury Secretary Steven Mnuchin is eager to complete tax reform this year, and while CNBC’s Jim Cramer fully understands its benefits, he’s not convinced it will happen.
Lower corporate taxes would push companies to repatriate their assets back to the United States, which they have been resisting because of high, noncompetitive U.S. tax rates. Domestic companies could then use that money to hire more people and expand business, thus growing the U.S. economy.
“However, as much as I love tax reform, I’m a realist,” Cramer said. “Earlier this year, at the time of the inauguration, I could not have been more excited about the president’s economic agenda. But not anymore. I know better now.”
Congress’ disagreement over the border-adjustment tax, which would place a value-added tax on imported goods in order to fund the tax cuts, also stymied tax reform talks.
“Then this morning the Treasury secretary said he wants to change the taxation of pass-throughs, a type of business that could benefit from tax reform. The administration also wants to eliminate deductions for state and local income tax in order to pay for the plan,” Cramer said. “Ugh. Here we go again.”
Don’t get Cramer wrong; he wants tax reform completed. But keeping it simple is the best way to get it done, and that’s not what the “Mad Money” host sees congressional Republicans doing.
“Any kind of comprehensive reform, whether we’re talking health care or immigration or taxes, always takes forever, always ends up being unpopular [and] usually ends up failing,” he said. “But if you want something done, just do it. Give the middle class a tax cut. Give companies a tax holiday on the repatriation of overseas assets, and then watch the economy bloom.”
Cramer suggested policymakers do the same thing with infrastructure and offer U.S. citizens savings bonds to fund repairs of crumbling roads, bridges and tunnels.
“We’ll buy them. We’ll do it because we’re patriotic and we’re practical,” he said.
But if Congress is going to let lawmakers and interest groups and all the powers that be complicate what should be simple policy measures, Cramer said they should just forget about it.
“There was a time when I used to ask each executive who came on the show what they would do with the money they’ll get from a lower corporate tax rate,” Cramer said. “I don’t even bother doing that any more. You know why? Because I don’t want to waste your time. You’ve got other things to do. Doing it this way, going about it the way the White House is doing it right now, pretty much insures failure. The best is the enemy of the good. Memo to the GOP: stop trying to make tax reform perfect. Just get something passed. Let’s get this done.”