Republicans cut tax rates, tax revenues rise
Could that headline possibly be right?
We’ve been told by the liberal media that Republican tax-rate cuts have caused the federal deficit to explode. We’ve been told that the cuts benefit only the wealthy.
Both of those statements are wrong. The truth is a frequent casualty when Democratic politicians and their liberal media fellow-travelers try to bury the obvious benefits of the Republican tax cuts.
Start with the fact that for the first five months of this fiscal year, October through February, tax receipts didn’t drop but were essentially unchanged from the previous fiscal year. So how did that happen?
Cutting tax rates boosts employment, consumer spending, and business investment in plants and equipment. A more robust economy results in higher tax payments despite lower tax rates. Everybody wins: employees, businesses, and government.
That truth is not just an economist’s theory. It’s been proven time and again by Presidents Coolidge, Kennedy, Reagan, and Clinton, all of whom cut tax rates and all of whom got the same result.
In 1963, Kennedy proposed major tax cuts, declaring, “A rising tide lifts all boats.” To many Democrats’ chagrin, he also said, “The paradoxical truth is that taxes are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”
In his recent book, “Prisoners of Hope,” Randall Woods called the Kennedy tax cut an economic “stroke of genius” that made Lyndon Johnson’s Great Society possible. Gross national product and disposable personal income both rose dramatically while the number of families in poverty and people out of work dropped.
Those good things are happening again today. The economy has grown far faster than Democratic naysayers said it could. Wages are racing ahead, and the unemployment rate just hit an all-time low.
Lost in the media’s wailing about the deficit, we are getting numbers that allow us to see tax reform’s effects on a year-over-year basis, and they’re looking good. February’s federal tax receipts were actually 10 percent higher than they were last year.
Monthly results will fluctuate as we move through the year, but the message is clear: The sky is not falling, and both the economy and tax receipts are responding the way Republicans’ said they would — the way they have every time tax rates are cut.
Turn now to who’s benefiting from this boom. Are only the wealthy better off, leaving what Nancy Pelosi called “crumbs” for the rest of us?
Complete tax data for 2018 isn’t available yet, so we’ll need to rely on best estimates. The non-partisan Tax Policy Center expects that high income Americans will have paid an even larger percentage of personal income taxes than they did prior to the Republican tax rate cuts.
Specifically, the TPC estimates that the top 20 percent of earners will pay 87 percent of all 2018 income taxes, up from 84 percent in 2017. Yet their share of national income will remain at about 52 percent.
U.S. households with the highest 10 percent of incomes pay 45 percent of their income as taxes, the highest in the world. Compare that to taxpayers in countries like France, Japan, Sweden, or Denmark, all of whom pay less than 28 percent. Surprised?
According to the Organization for Economic Cooperation and Development in Paris, the U.S. “has the most progressive tax system and collects the largest share of taxes from the richest 10% of [its] population” in the developed world. Its figures include income, Social Security, and Medicare taxes.
Many of us in the lower 60 percent of incomes who paid income taxes last year will pay none in 2018. Democrats should be cheering Republicans’ even more progressive income tax.
As a side note, the Republican economic boom is a tax bonanza for state governments. Prudent ones like Utah are deciding how to spend the windfall. Spendthrift ones — all governed by Democrats — at least have much smaller revenue holes to fill.
So if tax receipts are about what they were last year and those with high incomes are shouldering even more of the income tax burden, why is the deficit increasing?
The short answer: runaway entitlement spending.
Entitlements are government programs without set budgets. All individuals who meet certain criteria automatically get government checks and/or benefits. Social Security, Medicare, Medicaid, Obamacare, and a host of welfare programs now consume about 70 percent of all federal government spending.
Spending on those programs increased by $142 billion in the first five months of the fiscal year, accounting essentially for all of the deficit increase.
Neither the public nor our politicians are willing to make the hard choices needed to rein in deficits, so we keep kicking the can down the road. Until the day reckoning — and there will be one — sit back and enjoy having your cake and eating it, too.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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More lies and propaganda from the d-bag that used to post this garbage on SGNews.
A parasite or a frozen Veggie? You decide. (Official nickname) You are being invaded SGI!!!! …… Ice plant was one of the MAJOR reasons the SG news shut down their comment section. Note. Nothing but emotional vitriol. Be ye wise J W. Not kidding. she/he offers nothing constructive, nothing humorous, nothing insightful, just vehenently counters anything that does not agree with liberal/left views, or any stated supported non political viewpoint , as you read above, so ye shall read below over & over again. A parasitic social media NPC. And honestly, I am being nice. Good luck. You have been forewarned.
“Ice plant was one of the MAJOR reasons the SG news shut down their comment section.”
No way you can prove that. And even if it were true, I’d wear it as a badge of honor. SGNews is a bastion for right-wing fools and ignorant Utah filth. The comment section NEEDED to be shut down. Suckit, loser.
Howard, in the beginning of the year 1984 , a good friend and I decided to take a chance. We went to the office of Dr Art Laffer on campus and asked him (literally begged) if he would teach one undergrad class the next semester. He was a really cordial and humorous guy. He said he would think about it. Next semester, sure enough, he taught Money & Banking for us undergrad biz majors. And yes I was able to enroll in that class, lucky enough. P. Kennedy was the first to go with modern supply side economics and it worked. We know P. Carter banked on Milton Friedman, and we got the term stagflation added to our vocabulary. And of course good ole old school Keynesian economics, which made a comeback to restart the US economy during the great recession, when the banking system crashed, otherwise a poor choice, but a last resort when all else fails.
Here’s a brief lesson in basic economics Howie. Money is a medium of exchange. Without it, large scale trade becomes difficult. Therefor, the more of it that is in circulation, the more trade is facilitated. When money is taken out of circulation due to banks refusing to lend, corporations and individuals hoarding it or by government confiscation in the form of taxes, trade between the rest of us is stifled. Your beloved president has very little control over this. Most of it is controlled by a very small group of powerful people you’ve never heard of. You need to stop believing in and spreading fairy tails.