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'Keep It Simple, Stupid'

Lawrence Kudlow on

More recent polls are also showing majority support for a tax cut.

Republicans should draw on the experiences of Ronald Reagan and JFK. In both cases, similar tax-rate cuts unleashed a spurt of prosperity and job creation and revenue growth. Conversely, after Barack Obama raised taxes, the economy experienced less than 2 percent growth, and deficits remained sky high.

The business tax cut is, as my friend Larry Kudlow preaches often, "a middle-class tax cut." As even the not-so-friendly Congressional Budget Office recently concluded, more than 60 percent of the gain from a business tax cut goes to workers in the form of higher wages.

As for the "cost" of the tax cut, growth of the economy is a precondition to getting the debt down. We will never make progress cutting Washington's deficits and debt with an economy growing at the 1.8 percent the CBO forecasters are predicting. We need 3 percent or more growth. Under that scenario, the debt burden shrinks as a share of our economy every year. With 3 percent growth rather than 2 percent growth, the federal government collects $3 trillion more revenues over a decade.

No tax increase could possibly generate those kinds of revenues. The good news is that Trump's policies of lightening the burden of regulation and promoting American energy have already lifted the economy to 2.6 percent growth. The Trump tax cut can get us well over the 3 percent hurdle for years to come.

Republicans: Don't try to rewrite the 80,000-page tax code. Cut taxes now, and then build political momentum for a tax reform and simplification agenda in 2018 and 2019. Three years after Reagan cut taxes, the economy boomed to 4 percent growth and the Gipper won 49 states in the next election.

That's a pretty smart model to follow.

Stephen Moore is a senior economic analyst with CNN. His latest book is "Fueling Freedom: Exposing the Mad War on Energy." He served as a senior economic adviser to the Trump campaign. To find out more about Stephen Moore and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

Copyright 2017 Creators Syndicate Inc.
 

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