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.
Wow, 32 cents on the dollar of income, iow 68 percent tax rate, that does sound serious.
sure, maybe my 401 might get a bump...
I'll predict this....regular people won't see much...
but you betcha that those multi millionaire CEO's will get big pay raises and bonuses in the millions...
again, making the regular people the laughing stock of this country...
“..forcing the middle class to ‘pay for’ corporate America’s tax cut.”
Exactly. No one, including the upper middle class, should have to pay more taxes!
The GOP can spin all the numbers they want to, but it’s still going to add up to losing upper middle class voters in 2018. I sometimes wonder about the GOP brain’s capacity.
There are some really good features of the tax bill. Why would they screw it all up by raising anyone’s taxes?
Because, like Democrats, the GOP-e rejects empirical evidence, which has shown that receipts to the US Treasury actually RISE, when all tax burdens are lowered.
Ryan and McConnell began this exercise from the starting point of revenue neutrality, meaning that a cut in federal government revenue was off the table.
If that's where you start, you can't craft anything but a shell game, which is what they've done.
” If Republicans don’t get it, they’ll lose control of Congress.”
Republicans WANT to lose control of congress.
Between the 36% tax rate I'll be forced into and the 33% of my monthly income I'm forced to pay because ex-wife and no-fault divorce I'm not kidding .......
And once the Trump "Tax Reform" plan makes it so I can no longer deduct the forced at the point of a gun alimony? Yep, I count that as a TAX HIKE which reduces me to living on next to nothing for my troubles of having a job and being a high-income earner.
Talk about getting f**ked without getting kissed .....
Clipherbrakeline,oops,ImeannowIgetwhatyouresaying.Hmm,timetotryyetanotherkeyboard.
Hard to argue the truth of that statement given their inability to get a single issue right or repeal the disaster known as Obamacare since winning the election last year ....
I've said it for decades now: I hate the Democrats and I hate the Republican's even more than I hate the Democrats.
Gotta give the Democrats credit though: they say what they'll do when they win an election and they do it. I disagree with every damn' thing they do but they hold true to their word.
Republicans on the other hand say what they're going to do, get elected, then do whatever the Democrats want them to do.
Proof: They went right along with doubling the national debt under the disaster that's known as the Obama Administration. They had the power to stop it (the House of Representatives controls the country's checkbook and what we pay for/don't pay for) and instead they went right along with everything Obama wanted, caved, and paid for it.
Republicans are COWARDS and deserve the most heinous, painful, public political death. There is absolutely ZERO use for the Republican party anymore. They may as well all flip their party affiliation to (D) and get it over with.
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