OPINION:
Donald Trump put some meat on the bones of his economic plan in New York on Thursday, and his plan to restore growth should mute some of his more ardent conservative critics. These critics have been playing “can you top this” with each other, vying to say the meanest things about him, and here’s something positive for them to consider.
Mr. Trump calls this the most pro-growth plan in “many, many decades,” and if not quite that it’s one of the best prescriptions for rebuilding the economy since the Reagan administration.
The heart of the plan is tax reform, which would lower tax rates to 12, 25 and 33 percent. Everyone would pay a lower rate and the middle class would see a 30 percent reduction in federal taxes. He pays for this, in part, by capping credits and deductions for those who make more than roughly $500,000 a year.
Lower rates in exchange for fewer loopholes is good. This simplifies the tens of thousands of pages of current tax law, which he rightly says someone has to be a “grand master CPA” to figure out. There’s one caveat: He boasts that his plan will remove “many millions of families from the tax rolls entirely.” That’s a bad idea in a democracy. Everyone should pay something for the opportunity to lead a good life.
His business tax cut lowers the rate from 35 percent, the highest in the world, to 15 percent. This would bring capital and businesses back home, and stop corporate inversions with a carrot, not a stick. Why President Obama didn’t do this long ago is a mystery. The Trump plan allows the lower tax rate to be paid by the 26 million small businesses as well.
Businesses would be able to deduct capital purchases for building new plants and purchasing new computers and equipment. The Tax Foundation says this is one of the best pro-growth changes he could make.
Mr. Trump would cripple the regulatory octopus in Washington that smothers new business investment. He promises to repeal the so-called Clean Power Plant rules at EPA that’s killing the coal industry and the tens of thousands of jobs that go with it. He would repeal and replace Obamacare, which is going bankrupt much faster than anyone anticipated.
Mr. Trump calculates his plan would produce a 3.5 percent growth over the next five years, which Mr. Obama hasn’t done yet. Over the past year growth has averaged 1.2 percent. That’s a miserable performance.
Where Mr. Trump treads warily is on trade policy. The right kind of free trade is necessary for growth and prosperity, but in New York he sounded almost like a Smoot-Hawley protectionist. He called the North American Free Trade Agreement “a disaster” and he would renegotiate it. He threatened tariffs against China. Mr. Trump supports free trade, he says, if it’s fair trade. Hard to argue with that.
Mr. Trump wants lower taxes; Hillary wants higher taxes. He wants spending cuts; Hillary wants free college, health care and who knows what else. He wants choice in education, Hillary touts the union agenda. Hillary would double down on Obamacare, he would repeal it with something that works.
If the Trump plans gets anywhere near 3.5 percent growth, wages and family incomes will rise again, poverty will decline, and with it the budget deficit. Tax cuts and regulatory relief are good ways to get back to growth path. Democrats insist that’s not possible, but what we know for sure is that it isn’t possible if we keep doing what we’re doing now.
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