Last week, the Republican House passed a 2018 budget resolution largely along party lines. This paves the way for President Trump’s tax reform plan, the largest overhaul of the tax code since Ronald Reagan.
Democrats who voted against the budget resolution predictably blasted the Trump plan as “tax cuts for the wealthy and big corporations.” Their cries that it will increase the deficit and the national debt might be a bit more convincing if during the time when they were in power, they hadn’t run the deficit up to a trillion dollars or nearly doubled the national debt to $20 trillion. Or for that matter, if they hadn’t let years go by without even passing a budget, which is Congress’ most basic responsibility
During the debut episode of my new TBN show this weekend, I discussed the Trump budget plan with economist John C. Goodman, one of the fathers of such innovations as Health Savings Accounts, IRAs and 401(k)s. We talked about how the debt is now so large, we can’t dig out of it with more taxes or spending cuts. The only way to get a handle on it is to grow the economy, so that there are more workers making more money, which increases tax revenues organically. We pointed out that this used to be common wisdom accepted by both parties, and was the foundation of tax cuts that jump-started the economy under both Presidents Kennedy and Reagan.
We also covered the lie that cutting corporate tax rates is a “giveaway” to big corporations. In the first place, most corporations are small businesses. Secondly, corporations don’t “pay” taxes; as a business expense, their cost is passed along to consumers, so all of us pay them in the form of higher prices when we buy goods and services. Third, we have the highest corporate tax rate among all leading nations, and it’s keeping corporate cash parked overseas instead of allowing it to be spent here in America on expansion, which means hiring more workers, and hence, more income taxes to the government. Finally, it’s very revealing of the mindset of today’s liberals that so many describe a tax cut as a “giveaway,” as if all your money belongs to the government and if they let you keep a little more of it, it’s a “gift.”
But we’ve seen this movie before: the Republican House passes something that goes to the Senate to die. We’re already seeing signs that even if Trump’s tax plan makes it through the Congressional sausage grinder, it will look nothing like the animal he sent them. Maybe it would be wiser to break it up into pieces, so that notoriously recalcitrant GOP Senators couldn’t once again say, “I agree with 99% of it, but that one percent offends my principles” and kill the whole thing. That’s happened too many times, even with such bedrock campaign promises as repealing and replacing Obamacare. If they can’t even get rid of something as universally hated as our current unfair, unintelligible tax code, then they had better brace for the worst hurricane so far to hit them during the 2018 primary elections.
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