With This Tax Cut, Trump and the GOP Are on the Side of the Growth Angels
In a recent Tax Foundation analysis by President Scott Hodge, he notes that even the lowball Joint Committee on Taxation agrees the tax cuts pay for themselves. How? More gross domestic product will be generated than revenues lost to the Treasury. For every dollar lost, the tax cuts produce roughly $1.90 in additional GDP.
Also from the Tax Foundation is the assertion that the biggest tax liability reductions will come to the middle class, as shown through several examples. A single parent who earns $52,000 and has two children claims a 36 percent reduction in tax liabilities. A single-earner married couple with two children that makes $85,000 and files jointly gets a 20 percent tax-revenue reduction. And a married single-earner couple with two children that files jointly and earns $2 million only gets a 3 percent reduction in tax liabilities. So much for the tax-cuts-for-the-rich argument.
Let's not forget that the plan includes Arctic National Wildlife Refuge drilling access and the repeal of the Obamacare individual mandate. Let's also not forget the Trump administration's massive reductions of burdensome business regulations.
At the end of the day, the success of the Trump tax cuts will not be decided by Democrat-leaning polls or highly flawed econometric models. The proof in this pudding will be in the eating.
With the supply-side model of lower marginal tax-rate incentives to work, save and invest, plus significantly less tax avoidance and sheltering, the economy will move back to its normal steady-state pattern of 3 to 4 percent growth.
Already in the past two quarters we've seen a bump in business-equipment investment, producing better than 3 percent growth. The fourth quarter is likely to remain above 3 percent. The results of lower withholding rates accompanied by higher income-bracket thresholds will show up in February.
More take-home pay is always a winner. And businesses large and small are beginning to pull the investment trigger. Yes, the middle class will benefit. But everyone will profit from the first business boom in over 20 years.
President Kennedy, President Ronald Reagan, the late Jack Kemp, economist Art Laffer and the rest of the supply-side clan -- which now includes Donald Trump -- believes that a rising tide lifts all boats.
So which is better: 1 to 2 percent stagnation, or 3 to 4 percent prosperity?
Let the voters decide next year. But I'm taking the high ground.
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