There are zero excuses to stand against the Trump tax cuts
Love Donald Trump or hate him, what is undeniable one year into his presidency is the new economic optimism of workers, investors, small business owners and major CEOs. An economy that was growing at 1.6 percent when he entered office and never achieved a 3 percent growth rate in the previous decade is now already up to near 3.5 percent growth.
And that’s without the Trump tax cut. I’m on record at CNN for predicting 3.5 percent and possibly 4 percent growth next year, which we haven’t seen in at least 15 years. Barack Obama kept predicting 4 percent growth year after year and he never came close. Maybe a change in strategy on regulation, taxes, energy policy and other strategic shifts makes sense after a decade of malaise.
There’s no sense in arguing about what the impact of the Trump tax cuts will be. It’s going to be signed into law by the end of the week, and now we will see a great experiment in economic policy carried out. Republicans have bet the farm, as Ronald Reagan and John Kennedy did, that a big tax cut oriented towards incentivizing investment, work and business startups through lower tax rates.There’s an old saying: When you tax something, you get less of it. When you tax something less, you get more of it. Why is it so hard to believe that taxing investment and labor less will mean more of it? Why is it so hard to conceive that by lowering America’s highest in the world business tax rate, firms will want to relocate to the United States? Trump has said from the start that this tax bill is about “making America more competitive” in a global economy.
One thing is for sure. China, Europe, Canada, Russia and Mexico don’t want the Trump tax cuts to pass. These nations are firmly on the side of Nancy Pelosi and Chuck Schumer on this one. Ireland, which has recruited dozens of major firms from America to places like Dublin with its 12.5 percent business tax rate, is terrified that Trump will succeed in lowering the American corporate tax rate to 21 percent. This is a tax bill that puts American business and American workers first. It’s about time we stop foreigners from eating our lunch and stealing our jobs.
Still the left’s refrain is this is a tax giveaway for big bad corporations and rich business owners. Actually, nearly everyone of the 26 million small business owners in America gets a tax cut, too. Many of them will plow billions of dollars back into the economy as firms like Apple and FedEx already have pledged to do. The anti-business rhetoric of the left during the debate is dispiriting in the extreme. Somehow being pro-business is seen as unpatriotic.
Trump is unapologetically pro-American business. It’s one of the reasons the stock market has nonstop rallied since last November and wealth has risen by at least $5.5 trillion since election day. Someone needs to remind the Democrats that being anti-business is no way to be pro-worker. As my old boss Dick Armey, the former House majority leader used to say, “Liberals love jobs, but they hate employers.” Trump loves jobs, and loves employers.
As for the middle class, they will benefit primarily through more prosperity from this corporate tax cut. But they also benefit from their taxes being cut, too. The big benefits to the middle class include doubling the standard deduction to more than $24,000 from about $12,000 today. This means your first $24,000 of income is tax free. Tax rates at every income level will get cut by about 10 percent. Moreover, the child credit will double from $1,000 per child to $2,000. For a family with three kids that’s an extra $3,000 right off the top on taxes.
So where did this lie come from that the middle class will pay more taxes under the Trump tax plan? The president announced last week that he has instructed the Treasury Department to change the withholding tables by Feb. 1 so that the tax cut appears in people’s paychecks right away. Then they will see the Trump tax cut in bigger paychecks will realize that the left has been less than truthful.
I asked a cab driver a few weeks ago what he thought of the Trump tax cut and he replied, “Show me the money!” That’s exactly what Trump is going to do starting early next year. Something tells me that will make millions of people very happy.
Stephen Moore is the distinguished visiting fellow for the Project for Economic Growth at The Heritage Foundation and a senior economic analyst at CNN. He served as an economic advisor to Donald Trump’s 2016 presidential campaign. You can follow him on Twitter @StephenMoore.