From The Wall Street Journal:
Cut seeks to spark sustained 3% economic growth
By Richard Rubin and Nick Timiraos | Updated April 26, 2017 9:45 a.m. ET
To spur economic growth, President Donald Trump plans to propose what his Treasury Secretary said Wednesday would be the largest tax cut in the country’s history.
The plan calls for 15% tax rates on all businesses, deeper than the rate cuts proposed by House Republicans. Those rates are likely to drive Democrats away and to cause complications in Congress because changes in tax policy that the Senate can pass on a party-line vote, under the budget procedure known as reconciliation, aren’t allowed to create long-run budget deficits.
Treasury Secretary Steven Mnuchin said at an event Wednesday morning that the administration wants permanent policy changes, but that temporary cuts could be considered, too.
“This is going to be the biggest tax cut and the largest tax reform in the history of our country,” he said at a conference in Washington sponsored by The Hill newspaper.
There’s a lot more at the link, and, from what I can see it’s half of a good plan. Why half? Because the plan does not address spending, and without addressing spending, the plan balloons the deficit. When the Journal article mentioned that it might have to be passed under reconciliation, it tells you that the Trump Administration knows that this plan will increase deficits; to advance a tax plan through the Senate without risking a filibuster — the Democrats could choose not to filibuster, but you know they’ll try to stop this — it cannot increase the deficit beyond a ten-year time frame. That’s why the tax cuts passed under the younger President Bush had the automatic sunset provision, which would have raised taxes on everybody. With the Democrats holding the Senate and the White House, the Republican-controlled House was able to get the tax cuts extended for lower-income people, but only at the cost of raising taxes on the top producers.
Trump administration officials say they will rely on those optimistic growth projections to assume any cuts will generate substantial higher revenues to offset declines from lower rates. Most tax specialists say such cuts are unlikely to fully pay themselves.
Now, where have we heard that before? It’s been tried before; has it ever worked before?
The First Street Journal had many articles condemning the huge deficits run under President Obama, and the Editor does not believe that deficits are somehow better or more acceptable because a Republican in in the White House. I have already noted that continual deficit spending, during good times as well as bad, has taken us completely away from Keynesian ideas and has, in effect, inoculated our economy to any projected benefits from stimulus. Constant stimulus has already been figured in to our economy.
Yes, our taxes are too high, way too high, but we must cut spending as well as taxes; if we do not, we will simply be adding to the burden on the taxpayers to pay ever-increasing debt service, tax dollars being taken to pay for programs long in the past. President Trump’s proposed FY2018 budget, the one he called a “skinny” budget, and Democratic National Committee Chairman Tom Perez called a budget using a different adjective beginning with an “s”, is a start, but it’s not a big enough start. Federal government spending needs to be cut not just down to the bone, but to start sawing into the bone a bit as well. The entire Department of Education needs to be flushed down the toilet, the Department of Commerce reduced to its statistical services and trade missions, the Department of Energy pared back, and the biggest offender of all, Health and Human Services, not just eliminated, but all of the wages ever paid out to any of its employees somehow garnished back!
OK, OK, I know that last can’t happen, but it should!
The federal government is simply too big, way too big, not only taking over services which ought to be performed by states and cities, but having services which should not exist at all.
Once we cut back on all of that unnecessary and irresponsible government spending, it will be time to cut taxes.
RELATED ARTICLES IN THE WALL STREET JOURNAL
- How Trump’s Tax Plans Could Affect Your Taxes
- How Tax Plan Would Affect Wall Street
- Trump to Seek Tax Rate of 15% on Owner-Operated Firms
- Trump Wants to Cut Corporate Rate to 15%
- Five Roadblocks to Proposed Corporate Tax Cut