By Steve Pauwels
The column below brought to you courtesy of Striker Journal …
Striker Summary: Data indicates tax-cuts passed during the Trump Administration served the overall economy well. This is consistent with the history of lower tax rates in the United States. Question is: Do fans of big-government care? Will it make any difference to them?
by Steve Pauwels
There are oodles of persons who won’t admit anti-Semitic, Muslim radicals mounted an attack and perpetrated atrocities on Israelis two months ago. That dumbfounding phenomenon ought to convince everyone — badda-bing, badda-boom — that some folks are impenetrably reality-proof. No amount of evidence will persuade them of any conclusion they don’t want to believe.
Of course, well before the flagrant advent of Hamas-denial syndrome there were plenty of other indicators that some people simply won’t face facts. Consider recent economic revelations which — for the umpteenth time at minimum — demonstrate the undeniable: Lowering tax rates dependably strengthens a nation’s fisc overall and advantages its citizens individually.
Western Journal‘s Randy DeSoto reports a bevy of economists from distinguished Universities and the U.S. Treasury have documented former President Donald Trump’s free market-oriented 2017 Tax Cuts and Jobs Act [TCJA] — which beat back the corporate tax rate from 35 to 21 percent and loosened expensing allowances for shorter-term capital investments — “worked as advertised … creat[ing} a surge in business investment, which greatly benefited the economy.”
The Wall Street Journal‘s James Freeman summarizes the 51-page study:
“The results of the Trump corporate tax reform were more business investment, more growth, more wages for workers—and little impact on government revenue as lower corporate tax rates were offset by an expanding economy. Game, set, match,”
Sounds like welcome news all around to me.
This acknowledgement is synchronous with the theory popularly known as the “Laffer Curve” — much discussed in the 1970s/80s: Lower tax levies motivate individuals to work more, invest more and thus generate more income because they can actually take home more of those hard-won dollars. Once again: A desirable outcome on multiple levels.
Posting on social media, no-less-than a former chairman of the Council of Economic Advisers during the Obama(!) administration, Harvard’s Jason Furman, confirmed, “Taxes actually do matter … Companies that saw larger reductions in tax rates from the TCJA also experienced larger increases in investment in the years that followed.”
Throw in other measures which make it easier for working folks, investors and firms to maximize profits and the salubrious effects only expand. The overall result? A boon not just to solitary “regular guys”, households or enterprises but to the broader economy as well: fortified job creation, energized business start-ups, expansion and innovation.
Oh, yeah: these adjustments produce healthy — or even fattened — revenues for government coffers as well.
Once more, DeSoto:
“[W]hen companies reinvest and grow and become more efficient, salaries go up for their employees, who then pay more in taxes. The result: No loss in overall revenue to the Treasury when considered over a 10-year period.”
He breaks down the recent numbers, underscoring”[t]he concept is simple, though most Democrats don’t seem to get it: A growing economy generates more revenue for the Treasury.”
By the way, contra past and current “expert” wisdom, there’s nothing terribly new here — just on-the-ground data inconvenient to big-government enthusiasts. Past presidential administrations — George W. Bush, Bill Clinton, Ronald Reagan, John F. Kennedy, Calvin Coolidge and Warren Harding — all applied the “tax-cuts-good” and/or “needless-government-regulation-bad” approach to economic policy; and American society subsequently enjoyed the gainful returns. To varying degrees and in variegated ways, these White House occupants — some Democrat, some Republican — enabled Americans to augment their bottom line, shrinking the IRS’s take and/or rebuffing growth-throttling regulations. What followed? Every time? A flourishing financial environment.
During the early stages of last century, President Harding and, perhaps more so, his near-peerless successor Calvin Coolidge took aim at constricting the State, including tax cuts. Something called “the roaring twenties” arrived in their wake.
JFK? Stephen Moore reminds us the thirty-fifth President of the United States — nearly beatified by most Democrats, mind you — memorably declaimed, “It is a paradoxical truth that tax rates are too high and tax revenues are too low, and the surest way to raise the revenues is to cut the rates now.”
Moore continues,
“When I met with Robert F. Kennedy Jr. a few weeks ago, he told me: ‘I learned from my uncle that tax rate cuts incentivize growth.’ [He] cut tax rates by 30% …. The economy and revenue exploded. The rich paid more, not less.”
Yes, Democrat Bill Clinton trimmed back the taxman’s share of earnings. So did GWB, the GOP former-Texas governor who replaced him. It shouldn’t surprise that the ensuing economic advantages tracked with those of their tax-slashing predecessors.
Ronald Reagan’s eight years in the Oval Office, of course, stand as arguably the most luminous case for the wonders of smaller government and more pocket-book freedom for “we the people”.
“Forty years takes us back to Ronald Reagan’s first term,” writes DeSoto, “when, following across-the-board tax cuts like those passed under Trump, the economy took off, experiencing 4.58 percent growth in 1983 and 7.2 percent in 1984”; and, I’ll add, continued with vigor — save for a brief interruption or two — for the next couple decades.
Perhaps most significantly, shielding industriously working, leading-edge, shrewdly investing men and women from confiscatory tax burdens doesn’t just help them financially; it honors their status as the highest of God’s creation — human beings made in the “image of God” (Genesis 1: 26). People are designed by Him to succeed, to invent, to solve problems, to prosper. Why should earthly elected officials and bureaucrats stand athwart that?
Coolidge’s chief motivation for trimming Washington’s sails was moral, not merely practical. “Coolidge didn’t favor tax cuts as a means to increase revenue or to buy off Democrats,” informs Amity Shlaes. “He favored them because they took government, the people’s servant, out of the way of the people.”
In his 1925 inaugural address, he avowed:
“The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny. Under this republic the rewards of industry belong to those who earn them.”
America’s founders would have agreed — ardently. Thomas Jefferson, for instance, insisted,
” [T]he mass of mankind has not been born, with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately, by the grace of god.”
To fellow-Virginian Samuel Kercheval he warned against his countrymen’s being
“taxed in our meat and in our drink, in our necessaries & our comforts, in our labors & our amusements, for our callings and our creeds, as the people of England are”.
Certainly, none of them would have tolerated a schema in which U.S. citizens line up like Dickensian orphans, timorously pleading with their D.C. masters for a scrap more of the fruits of our labor. “Please, sir, I want some more” …
All of the above — the principled, the pragmatic — have been confirmed over and over and over again for quite a stretch. Alas, to no avail against those fueled by worship of government; those who get a tingle in their tummies at the prospect of an avaricious, overweening State. They’re undyingly dedicated to more for Uncle Sam, less for the average citizen.
Facts, history, reason, right-and-wrong militate against this cult-like devotion to a dirigiste economy. The response from those captured by it? Self-deluding hostility. Aggressive gas-lighting. Or maybe just a yawn.
Taxpayers are stuck with the fall-out.
The views here are those of the author and not necessarily Striker Journal.
Image: Adapted from: Taxes illustration (via Flicker | CC-BY-SA 2.0); https://dailymontanan.com/2023/02/07/gianforte-tax-cuts-been-there-done-that/
Steve Pauwels is a pastor, writer, husband, father and grandfather who loves Jesus and wants to point others to follow Him.
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