Posted on 11/11/2017 11:34:51 AM PST by Kaslin
As the House and Senate work their way through the tax-cut-and-reform effort, let me make one thing clear: Both plans are pro-growth where the economic power comes from the business side. And where it comes from the personal side, there will be very little growth. That was always the bet.
During the spring and summer of 2016, economist Steve Moore and I, working with Trump campaign officials Steven Mnuchin and Stephen Miller, saw major tax reductions for large and small businesses as the centerpiece of the candidate’s tax policy. Whatever Congress came up with on the personal side, so be it.
So one way or another -- even with the glitches and differences between the House and Senate tax plans -- Congress will come up with a significant pro-growth bill because business tax cuts are still the centerpiece. And they should do it this year.
I spoke at the Senate Republican breakfast in Washington last Tuesday. The whole leadership was there. And I observed a total commitment among the GOP senators to get a tax bill through by year-end. This will not be another health-care breakdown.
Particularly after recent GOP electoral setbacks, the party knows it needs a strong tax-cut and economic-growth narrative for the 2018 midterms. If Republicans don’t get it, they’ll lose control of Congress.
And if they do get it, they may pick up seats.
The political stakes are high.
As mentioned, there are glitches in both the Senate and House tax plans. But most of them can be corrected. And the differences between the two plans should narrow in conference.
The all-important business tax rate will come down to 20 percent from 35 percent. That’s the key to economic growth. And the biggest beneficiaries will be middle-class wage earners.
The issue of small-business pass-throughs is not completely resolved. It seems the Senate has a better take on this than the House. But there’s a small-business tax cut coming.
The Senate’s idea to phase in the new corporate tax rate in 2019 is a bad idea. (President Trump agrees.) To be sure, the GOP senators want full cash expensing for capex projects for 2018. Good. But as Art Laffer warns, if you hold back the actual rate reduction, you’ll see a lot of tax avoidance and sheltering next year.
That will include offshoring. A delay will deter foreign companies from coming to the United States. You may wind up losing revenues -- perhaps $100 billion.
On the House side, the so-called “bubble rate” of 45.6 percent is also not a good idea. It’s being done to claw back the 12 percent rate high-end earners move through on the way to 40 percent. But why punish success?
Those upper-end folks are largely investment-oriented. As FedEx CEO Fred Smith says, it’s time to stop punishing investment. That includes businesses and individuals.
Let the Democrats be the class warriors who tax the rich. GOP stands for growth.
I assume this will be fixed in conference.
There are other issues. The personal side is a mishmash of credits and deductions. This is no Reagan bill of 1986. Good tax reform slashes individual rates so that reductions and loopholes are no longer necessary.
But there’s no slashing on the personal side, and it will be a fight over deductions. And frankly, I’m underwhelmed by the deduction part.
I keep thinking: Why didn’t the House and Senate simply agree on a 3 percent growth rate? And why haven’t they embraced the Trump administration’s argument that the business tax cuts will pay for themselves and generate 3 percent growth over the next decade?
House and Senate negotiators agreed on a 2.6 percent growth baseline. It’s better than the CBO’s 1.9 percent. But with 3 percent, they would have picked up $500 billion to $700 billion in additional revenues from faster growth.
Unfortunately, no model captures the significant pro-growth effects of international flows, such as repatriation and the possible capital inflow from foreign companies. Is it possible this could be changed in conference? Just a thought.
Of course, that old bugaboo is back: the Byrd rule. It annuls tax cuts if they promote deficits after ten years.
So here’s another thought: Senate Majority Leader Mitch McConnell used the nuclear option to end the filibuster on Supreme Court justice Neil Gorsuch. So why not nuclear-option the Byrd rule? Vice President Mike Pence is ready in the wings to override any objection.
The GOP must not let process stop growth-producing tax cuts. Growth is too important.
So let’s play hardball, GOP, and do what’s necessary to get these pro-growth tax cuts legislated and signed before year-end.
That will move the American economy back to the top of the worldwide heap. As JFK and Ronald Reagan argued, when we are strong at home, we’re strong abroad.
Not if Juan McCain has his way.
Two things are needed:
1) A FLAT TAX
- of preferably 10% but no more than 15%
- which will launch our economy and people’s income into mega wealth
- and downsize the IRS into a store front
2) Eliminating the unconstitutional 80% portion of the mostly illegal $4 trillion federal government.
BOTH are needed to bring about our ultimate goal: restoration of our Free Constitutional Republic.
You are 100% right.
You are correct but it will NEVER happen in this government, not just this administration but this government will self-preserve and never let it happen.
The feral gubment is overhead just like any portion of a business that does not produce revenue. Janitors, accountants, shop maintenance people and so forth are all overhead. No business can survive long with overhead costs as high as we pay for the feral gubment and neither will we.
Any person who tries to argue against a flat tax is just making excuses. But what about the poor? Exclude X per person no matter who you are for a cost of living that is indexed to inflation and let ‘er rip. The feral gubment is the cost of everyone doing business and should be a flat allocation for everyone to chip in on in direct proportion to any kind of income they obtain by any means.
It will NEVER happen with this feral gubment.
I’m sick of excuses for everything.
Larry obviously doesn't give a damn that Congress is forcing the middle class to 'pay for' corporate America's tax cut.
That may very well be true which says we should do the second thing first: eliminate the unconstitutional 80% portion of the mostly illegal $4 trillion federal government.
Then push for 10% flat tax and they won’t have any overhead to complain about.
We’re at war - freedom vs. tyranny. Many of us just don’t realize it yet.
Why only John McCain? What about Bob Corker?
“Why only John McCain? What about Bob Corker?”
Because I have only heard McCain mouthing off about it being DOA. I had not heard about Corker.
The underlying assumption here is that the gop wants to win next years election. Nothing could be further from the truth. They’re dying to become the minority faction of the uniparty once again.
Politics is a scam and we’re suckers for playing.
I suppose we will find out how Corker will vote regarding the tax vote. He has shown in the last several years what a RINO he is.
As far as McCain is concerned: I think he is ticked off at President Trump. (Off course he is also senile.
A pox on both their houses!
May the bluebird of happines crap on both the DemocRAT and the Republican birthday cakes!
How many seats will they pick up once people realize how much their taxes go up?
The best way to “pay for” the corporate “tax cut” is to SLASH taxes for the middle class.
Who’s gonna buy their crap if the middle class gets saddled with a tax increase?
Not to mention that the republicans will be destroyed in 2018.
Maybe that’s what they want.
It’s too hard having to be republicans when they have a republican president who’s really a libertarian populist.
Losing the Congress in 2018 is a way for the never Trump crowd to get their revenge.
The Republicans believe in “revenue neutral” tax cuts which means they don’t believe GDP growth and that tax cuts will make that happen. Tax cuts INCREASE revenue.
Exactly, which is kinda my point.
Great post. I wish I could respond to every point you brought up, but words fail me. You said more in under a hundred words, than most of us could say in a thousand.
What the Trump Administration is doing is going to crush people like me, caught in the middle between the "middle class" and businesses.
Already seen the numbers from my financial planner. His advice: quit my job, retire now so I don't send all my money to the Fed's and a vindictive bitch of an ex-wife.
The end result for people like me is I'll be stuck living on about thirty cents of every dollar I make because I won't be able to deduct alimony (of which I'm stuck paying $45k/year) from my taxes and the Fed's will shove me into the 36% tax bracket on top of that.
Screw that. I'll quit working and I won't care that a judge or the IRS throws my ass in jail for it. At least there I'll have three hots and a cot and not have to work full time and live outside under a bridge to pay the fed's or that ex-wife.
What the Trump Administration is doing is going to crush people like me, caught in the middle between the "middle class" and businesses.
Already seen the numbers from my financial planner. His advice: quit my job, retire now so I don't send all my money to the Fed's and a vindictive bitch of an ex-wife.
The end result for people like me is I'll be stuck living on about thirty cents of every dollar I make because I won't be able to deduct alimony (of which I'm stuck paying $45k/year) from my taxes and the Fed's will shove me into the 36% tax bracket on top of that.
Screw that. I'll quit working and I won't care that a judge or the IRS throws my ass in jail for it. At least there I'll have three hots and a cot and not have to work full time and live outside under a bridge to pay the fed's or that ex-wife.
This "reform" plan passes and I'll be forced to "live" on less than 32 cents per dollar that I make. No way that's acceptable to me. I'll quit my job, go on welfare, go on disability - whatever. I'll never work again. (I actually DO qualify for disability, it's pride that stops me from filing for it.)
The Republican's pass this tax bill as-is and I'll never vote (R) again. They'll lose my vote forever. I say that as a life-long Conservative who's NEVER voted for a Democrat at any level.
Ronald Reagan's gotta be spinning in his grave at this so-called "tax reform."
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