Trump's incentive-packed tax plan
Much as he did in his command performance before the United Nations, when he took back control of U.S. foreign policy, President Donald Trump has seized and energized the tax cut issue. Almost daily, he is pounding away on the themes of faster economic growth and more take-home pay, arguing that his plan will make America's economy great again.
This is Trumpian leadership at its best.
"Under my administration," Trump just told the National Association of Manufacturers, "the era of economic surrender is over."
The Trump plan would slash large- and small-business tax rates, double the standard deduction for middle-income folks, make the whole tax code simpler by eliminating unnecessary deductions, repeal the death tax and end the alternative minimum tax.
As usual, Democrats say the president's plan is a handout to the rich. But in a recent speech in Indianapolis, Trump asked: Why can't this be a bipartisan tax cut bill? He even quoted Democrat John F. Kennedy, who said, "The right kind of tax cut at the right time ... is the most effective measure that this government could take to spur our economy forward."
He also reminded his audience that President Reagan's tax cuts were passed with significant bipartisan majorities.
But today's Democrats have written JFK's tax story out of the history books (never mind Reagan's).
Key tax-writing committees are now polishing the Trump plan, fine-tuning it to pass the Senate with 51 votes. But there are a couple of key points that need clarifying.
The argument that the U.S. is doomed to 2 percent or less growth -- "secular stagnation" no matter what we do in terms of tax policy -- is nonsense. Across-the-board tax cuts produced 5 percent annual growth during the JFK period. And after tax cuts were fully implemented in 1983, real growth averaged 4.6 percent for the remainder of Reagan's presidency.
Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn are touting the 3 percent growth scenario, saying it will pay for the tax cuts. But the naysayers refuse to admit that tax rate incentives matter.