As taxpayers across the country line up to prepay their property taxes, former Housing and Urban Development Secretary Henry Cisneros gave CNBC his take on the new tax code.
“The whole intent of tax reform and tax reduction is to stimulate the economy, not create disruptions in the economy,” Cisneros told “Closing Bell” on Thursday.
“The experience that’s occurring today in New York and other blue states is an example of what happens when you rush a tax bill through [and] haven’t thought through all of the consequences of a very complex system that we have in our society.”
Cisneros, who served as HUD secretary under former President Bill Clinton, said that the effects of the tax code, which congressional Republicans rushed to pass ahead of the new year, threaten the “fragility” of the United States’ tax system.
To Cisneros, the crowds at tax offices around the country are emblematic of a hastily written bill that quietly handed down portions of the federal government’s power to local and state entities.
“The information has not been put out in a good way, and I think now, given that that bill passed, it’s incumbent on state and local governments and local authorities to really clarify their procedures and get it to people so they’re not petrified,” Cisneros said.
“That’s not the way you do the government’s business, to scare people,” Cisneros added.
The transfer of power from the federal branch to state and local governments also included the end of advanced refunding of municipal debt, the former HUD secretary said.
Ending this measure will impose higher debt rates on cities and townships, putting a layer of burden on local governments that could lead to budget cuts for key community programs, he said.
“Our system is very delicately built,” Cisneros said. “People rely on incentives, yes, but they also rely on a system that is finely tuned and finely balanced, and some of that balance has been upset in a serious way by this tax bill.”