by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Warts and all, if I were a voting member of Congress, I would certainly cast a “yea” vote for the tax-cut plan passed by the Senate and House and headed for conference (to work out minor differences) in the weeks ahead.
These bills are not perfect, especially on the individual side. But the business tax cuts will generate an investment boom in the years ahead. And those cuts will bring economic growth back to its historical norm of 3 to 4 percent.
Incredibly, the Joint Tax Committee (JTC) scored growth for the Senate plan at less than 1 percent. So much for their “dynamic” model. The Tax Foundation estimates 3 to 5 percent growth over the next ten years. That’s more like it, but it’s still too low.
Look, the central cause of the 2 percent real-GDP growth slump over the past 17 years has been a lack of capital formation, with virtually no real business investment, flattened productivity, and barely any increase in real workforce wages.
Yet the tax plans under discussion — which go back to the work of Steve Moore, Steven Mnuchin, Stephen Miller, Art Laffer, Steve Forbes, and myself — are remarkably similar to the Trump campaign draft on the business side.
So I can say with confidence that the current tax package is directly aimed at reducing the current high tax cost of capital and increasing after-tax returns from investment.