OPINION:
As part of his renewed emphasis on policy, former President Donald Trump last weekend said that tax cuts in general and the 2017 Tax Cuts and Jobs Act in particular lead and have led to economic growth and, as a result of that growth, to increased federal tax revenue. In making that correct assertion, Mr. Trump placed himself squarely on the side of the right thinkers concerning tax issues.
That sort of clarity seems important as we head to yet another unhappy encounter with tax reform next year. It also presents an important difference between Mr. Trump and Vice President Kamala Harris. Ms. Harris — at all times and in all places — has favored tax increases and expanding the federal government’s size and scope.
Even now, among the most mostly empty cabinet that is the vice president’s policy agenda, Ms. Harris has managed to favor the federal government rationing food and increasing the corporate tax rate to 28%. For those who may still be unclear on this point, corporations don’t pay taxes — people do.
The vice president has even been careless enough to play footsie with the idea of taxing unrealized capital gains, a long-held objective of Marxists everywhere. They perceive it correctly as a short way to destroy capital markets and, hence, capitalism. It is no surprise that it has emerged within the Harris orbit.
In response to Mr. Trump’s idea that tax cuts are better for taxpayers, the economy and federal tax revenue, the guardians of the fading and failing status quo (such as the Congressional Budget Office and the Joint Committee on Taxation) have argued that any loss of federal revenue — or, as normal people might say, allowing workers to keep the cash they’ve earned — is unacceptable.
The good news is that data suggests that this is wrong. Tax cuts lead to more federal tax revenue, not less. For example, between 2018 and 2025, total federal tax revenue is expected to be nearly $620 billion higher than anticipated before the passage of the Tax Cuts and Jobs Act, or TCJA.
How about overall growth? Real gross domestic product exceeded the CBO’s pre-TCJA estimates by $4 trillion between 2018 and 2023. Add a couple of more years, and the real effect becomes even more obvious. Through 2025, real gross domestic product is expected to be $12 trillion higher than projected before the TCJA.
Finally, real wages and salaries exceeded the CBO’s pre-TCJA estimates by $1.8 trillion from 2018 to 2023, and through 2025, they are expected to be $3.6 trillion higher than projected before the TCJA.
By evangelizing the economically positive effects of tax reduction, Mr. Trump channels his inner optimist and joins a line of presidents, including John F. Kennedy and Ronald Reagan, who understood that economic growth is an essential part of the solution to problems as varied as the debt and deficit, crime and drug abuse. As for Ms. Harris, her enthusiasm for higher taxes lines her up with presidents such as Jimmy Carter, George H.W. Bush and the current occupant.
• Michael McKenna is a contributing editor at The Washington Times.
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