Latest posts by Nancy Thorner and Ed Ingold (see all)
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In December 2017, the U.S. House and Senate, along partisan lines, passed historic tax reform legislation after last minute updates, allowing GOP members to keep their promises to the American people.
President Donald Trump signed the tax cut bill a week ago Friday morning in the Oval Office with little fanfare as his final order of business before the start of his Christmas holiday away from the White House.
The plan was touted as providing the following: 1) Cutting the corporate tax rate dramatically and providing new breaks for other businesses, 2) revising nearly every part of the tax system by lowering income tax rates at all levels and restructuring deductions, 3) extending beyond taxes and into health care by scrapping a central part of the Affordable Care Act, and 4) lowering income tax bills in 2018 for the majority of households.
Economic evidence suggests this tax reform is already lifting the stock market to multiple record highs over the past few months. According to consumer and business expectations, it will help spur economic growth as much as four percent next quarter. Already many firms are sending in great news of increased pay wages the bonuses. Additionally, the will create jobs and make our onerous tax code simpler and fairer for countless Americans.
Comparison to Reagan’s 1986 Tax Reform Act
The bipartisan 1986 Tax Reform Act, signed by President Reagan almost exactly 31 years ago, was the first across-the-board tax reduction for everyone since the Kennedy tax cuts, and there have been none since. President Carter tried and failed to pass a comprehensive tax reform bill in 1978-’79, even with a heavily Democratic Congress. Even Ted Kennedy signed Reagan’s 1986 Tax Reform Act. People are comparing the GOP’s tax bill to the one Reagan signed thirty-one years ago; however, that’s as far as it goes. Reagan inherited a stagnant economy from Jimmy Carter, much as Trump did from Obama’s eight years in office. Reagan’s method of operation was to pour money into military development. This served to stimulate the many industries which support the military, and, more importantly, established an economic race with Russia, which ultimately bankrupted Russia and overturned the Communist empire.
The GOP tax cut is different. Trump is not attempting to spend our way to prosperity (tried and failed by Obama), but rather to rebuild the basis for prosperity through the stimulation of business, manufacturing and, most importantly, good jobs. Retail and service jobs will always dominate the economy, but at low wages. That was the extent of Obama’s touted 2.5 million jobs under his watch, whereas the new tax bill is expected to create 335,000 new manufacturing jobs in the next year alone (2018), and that may be an underestimate!
Unpopularity of Tax Bill
For the moment, the new tax bill is highly unpopular. This is no surprise, since about 50% of the voters are Democrats and 45% of the citizens pay no income tax. Then too, even before the tax bill was signed into law on Friday, December 22 by President Trump, there was an orchestrated blitz by Democrat leadership, the main stream media, and left-wing outlets to discredit every aspect of the bill. On Sunday morning, the day before Christmas, Thomas Beaumont and Nicholas Riccardi at the Associated Press did all they could to convince readers that the tax bill just passed by Congress and signed by Donald Trump isn’t seen as a big deal and has no genuine enthusiastic support, even among his those who voted for Trump in 2016. Beaumont and Riccardi predictably claimed that the law bestows “its richest benefits on companies and wealthy individuals,” and employed a classic statistical deception to support that false contention.
A Winning Tax Bill
As to the Trump tax bill unfairly favoring the wealthy and corporation, these sources pay 90% of the taxes, and are due to receive only 80% of the benefits under the new law. Looking at it another way, if corporations and wealthy individuals did not exist, they would pay no taxes. The complainers would then be left with that responsibility, which comes close to the truth in high tax states like New York, New Jersey, California, and Illinois, where the wealthy are fleeing toward welcoming states like Texas, Georgia, Alabama, Indiana, and Ohio.
The speed at which the economy has recovered is amazing. The recovery actually began the day after the election of President Donald Trump on November, 2016 with a rise in the stock market. There has been a steady increase in the stock market ever since. Obama’s economy peaked with a Dow Jones average of 18,000, but it’s now on the verge of reaching 25,000. Obama blatantly claims this is merely building on the trend he started. In all fairness Obama has helped. He’s no longer standing in the middle of the track with a red flag.
Most likely Governor Romney would have been able to produce similar results had he won in 2013, but, alas, Romney was not willing (or able) to put up a good fight against Obama. Trump, on the other hand, is not someone to anger in a bar, although an unlikely place for him to be. Head down and swinging, Trump has taken on the establishment and won on many fronts (if not the front pages). After 8 years under 2% (often much under) with Obama, the GDP has been over 3% for the last three quarters and promises to exceed 4% in the second quarter next year. Obama’s average of 1.5% was actually retrograde – less than the population growth. A GDP of 4% translates to an extra $4T dollars in taxes, over double that under Obama.
Dana Perillo (Fox News) suggested that one measure of success is reflected in the complaints by your opposition. It seems like Trump is indeed doing well indeed.
To learn more about the bill visit here.
[Originally Published at Illinois Review]