Trump’s tax proposal is easy to understand as long as you separate the facts from the promotional advertising.
– The tax plan transfers several trillion dollars from the federal government to the richest Americans.
– Since there is no serious attempt to close tax loopholes or raise revenue, this is a massive exercise in deficit creation.
– This is a stimulus package to create jobs and bring prosperity. In particular, this is going to bring back the good old days to Trump’s core supporters.
This statement is asserted without proof, because in fact it has no historical validity. Upper-income tax cuts are not effective stimulants, and the money gets pocketed. For Trump supporters this is even more problematical, because–as many have pointed out–the good jobs they lost are not coming back. (Nonetheless, successful retraining programs for Appalachia are targeted for cuts in Trump’s budget.)
– The tax cuts will not cause a deficit, because economic growth will generate additional tax revenue.
This too is asserted without any quantitative justification, because there isn’t any–the math just doesn’t work. The growth rates to make that happen aren’t even close to real. The shortfall will be real and will starve government’s ability to deliver services.
It also needs to be mentioned that this deficit is occurring at exactly the wrong point in the business cycle. Governments need to run deficits when the economy is collapsing (as when Obama took over), so as to stop the vicious cycle of loss of demand causing loss of jobs causing even more loss of demand. The economy now is in generally good shape, working toward statistically full employment. Deficits now are inflationary, leading to speculation, higher interest rates, and the possibility of another bubble and crash.
So this isn’t really a stimulus package at all–it’s just a tax cut for the rich and a convenient excuse. Or to put it a little differently, it’s a payback to the donors who realized that in the age of Citizens United, it is cheaper to buy the Republican party than to pay taxes.
Trump himself may very well believe what he is saying, but he has shown remarkable ability believe that anything good for Donald Trump is by definition the salvation of the USA.
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