The tax cut, and it’s about time we had one

For those on the political right bewailing Congress’ inability to get very much accomplished this year, enjoy your bigger take-home pay starting in your first 2017 paycheck. Though this tax cut is not large enough, and isn’t even close to the size of 1980s tax cuts, I’m with Nobel Prize-winning economist Milton Friedman:

And yes, most of you reading this will be getting a tax cut, contrary to the demagoguery of the Democrats (none of whom voted for the tax cut) and their leftist apparatchiks. But don’t believe me; check for yourself on this tax cut calculator. Guy Benson notes:

The Democrats’ central attack against the GOP tax reform bill is all too familiar: It’s a giveaway to corporations and “the rich” that hurts the middle class. They’ve falsely called the plan a tax increase on the middle class, and demagogued it as a “massive attack” on middle income taxpayers — not to mention the “end of the world.” Throughout this debate, we’ve shared data-driven analyses from three separate nonpartisan organizations: The Joint Committee on Taxation (JCT), which is an official Congressional scorekeeper, the Tax Foundation (which leans to the right), and the Tax Policy Center or TPC, (which leans to the left). In spite of the deceptive rhetoric flying around social media and the airwaves, all three outfits agreed that the GOP proposal would, on average, reduce the tax burdens of every income group in America. We’ve showcased the TPC findings because that group is typically home to Democrats’ preferred experts. Well, TPC is out with their fresh analysis of the finalized tax bill, and guess what? As we’ve been saying for weeks, it will slash taxes for the vast, vast majority of American taxpayers. … The average tax cut will be $1,600, according to TPC’s data (Republicans cite a different statistic: A tax cut of more than $2,000 for a median income family of four). Let those numbers marinate for a moment. We’ve been caught in a blizzard of misinformation claiming that this bill hurts the middle class. But even the Republican-hostile Tax Policy Center couldn’t escape the empirical conclusion that 80 percent of all Americans will see their taxes reduced under the bill — and the “losers” are limited to just five percent (largely upper income filers from high-tax blue states). And no, the “one-percenter” rich do not disproportionately benefit from the cuts.

Brian Riedl of the Manhattan Institute brings out a chart: Riedl points out that the bottom 80 percent of U.S. families income-wise, which pay 30 percent of federal income taxes, will get 35 percent of the tax cuts, and the top 1 percent of families, who pay 27 percent of federal taxes, will get just 21 percent of the tax cuts. Instead of being eliminated as was originally proposed, the state and local tax deduction is being limited to $10,000 in sales, property and income taxes, and the home mortgage interest deduction is being limited to $750,000 in principal. (The average house value in Wisconsin is $166,100 according to Zillow, and according to SmartAsset the average Wisconsin home property tax bill is $4,923.) The Wisconsin Gazette amuses me by reporting:

Perhaps not coincidentally, the top 10 states with the highest average state and local tax deductions all voted for Democrat Hillary Clinton in last year’s election. New York led the way with an average state and local tax deduction of more than $22,000, followed by Connecticut, California, New Jersey and Massachusetts.

Well, to quote Charlie Sykes and others, elections have consequences. Maybe constituents of Sen. Charles Schumer and Kirsten Gillibrand (D–New York), Richard Blumenthal and Chris Murphy (D–Connecticut), House Minority Leader Nancy Pelosi (D–California). Sens. Cory Booker and Bob Mendenez (D–New Jersey), and Sens. Elizabeth Warren and Edward Markey (D–Massachusetts) should start voting differently. For that matter, maybe their constituents should start voting differently in state and local elections. David French chronicles other Democratic stupidity:

I’m starting to think that all too many Democrats believe that private citizens and private corporations don’t actually own their private income or their private property. Otherwise, how can we explain the Democratic insistence, repeated endlessly over the last 24 hours, that Republicans somehow are poised to execute a grand “heist” by cutting corporate and individual tax rates, granting an estimated 80.4 percent of taxpayers an average tax break of $2,140.

The rhetoric was remarkable, and the hysterics weren’t confined to fringe figures on the left.

Here’s House Democratic leader Nancy Pelosi:

And Senate Minority Leader Chuck Schumer:

Democratic presidential frontrunners Elizabeth Warren and Bernie Sanders weighed in:

Note the key words. A tax cut is a “heist.” It’s “looting” the government’s money. You’re “robbing” and “ransacking” the middle class. Schumer is the most measured, and even he acts like the government is “giving” people money by granting a tax break. Yes, part of this is just talking points. They’re words chosen to win a news cycle. But they also betray a deeper problem. Taken at face value they represent a fundamental redefinition of private property. It’s part of the Democratic march towards socialism, and it doesn’t just have implications for tax rates, it has grave consequences for civil liberties as well. The traditional view of private income and private property is clear. You own and control the money you make or the property you possess. By the consent of the governed the state can tax a portion of that money and regulate your use of your property, but the fundamental presumption remains — it’s your property. It’s your money. To put it in legal terms, the government bears the burden of establishing the need for your funds or the necessity for regulation. Indeed, the Constitution establishes the primacy of individual rather than state ownership by noting that the government can take your property only for “public use” — and only after paying “just compensation.” Increasingly, however, the American Left is flipping the proposition. What’s “yours” is the array of government goods and services established by the vast and growing federal bureaucracy. What’s “yours” is the bundle of bureaucratic and regulatory rights created by an increasingly regulatory state. Thus, private property is in reality a public resource. Private businesses are “public accommodations” that can easily be commandeered to become instruments of social policy — just ask the Christian business owners required to furnish free abortifacients to their employees or to use their artistic talents to celebrate immoral events. Read through that lens, and you can easily see why Democrats use the rhetoric of theft. In Barney Frank’s memorable phrase, “Government is simply the name we give to the things we choose to do together.” It’s the core expression of American community and the primary expression of American values. It’s the centerpiece of American life. In other words — as with so many other elements of our public debate — we’re back to first principles. We’re back to culture war. Red and Blue America are once again like ships passing in the night. A conservative hears the language of “theft” and laughs. I’m not stealing from anyone if I’m allowed to keep more of my own cash. The progressive hears the same word and nods. After all, the government must fund “our” welfare state, and the more money a person has, the greater the government’s moral and legal claim on his resources.

Business owner and Facebook Friend Michael Smith observes:

I think I finally understand why the people who oppose the GOP reform oppose it. At first, I didn’t get it. I mean, even if you accept their premise that the cuts were for “the rich” and corporations, the complainants were not getting penalized – they weren’t having anything taken away from them and they weren’t being asked to fill the gap. Other than envy, why would you begrudge your neighbor or his employee getting to keep more of what they earned, especially since neither of those circumstances changed your circumstances?
Then I got it. The complainants really do think that money belongs to them. They actually do think they are losing ground and that money that they expected to be theirs is being “given” to someone else at their expense. That’s the progressive mind for you – what’s mine is mine and what’s yours is mine, too.

The tax cut bill also gets rid of one of the most onerous provisions of ObamaCare — the penalty for not having health insurance, though not until Jan. 1, 2019. Getting rid of the penalty is not the same thing as getting rid of ObamaCare, but it does defang it to some extent, which may be all Republicans can accomplish given that they can’t seem to decide to fix it (which isn’t possible) or get rid of it entirely. Some fiscal conservatives are alarmed at ballooning of the federal deficit. I am completely unimpressed with any bewailing of the deficit and debt on the left, since they said nothing while their president was generating more debt than every previous president combined, and they’re only interested in deficit and debt reduction when they’re not in power. Increasing taxes will do nothing to reduce the deficit. The only thing that will reduce the deficit, now at about 16.7 percent of spending and 20.2 percent of revenues, is to cut 16.7 percent of the budget. There are, in fact, all kinds of proposals on how to cut the deficit without raising taxes. And everyone who believes this tax cut will balloon the deficit needs to put up his or her deficit-reduction proposals that do not include tax increases, or shut up. (Even Comrade Sanders has a deficit reduction proposal, though it is predictably stupid and socialist. The tax cut bill cuts taxes on business, though not enough, since the correct business tax rate is zero. However, the tax cut already is producing dividends, as CNBC reports:

Telecom giant AT&T was quick to respond to news of U.S. tax reform, announcing it would give some employees bonuses once the legislation is signed into law. AT&T said in a press release Wednesday that it would give more than 200,000 of its U.S. workers who are union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S. “Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” CEO Randall Stephenson said in a statement. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.” AT&T had previously said that it would invest $1 billion in the U.S. if “competitive” tax reform legislation was passed, and has said that the tax reform framework could increase demand for AT&T’s services.

CNBC also reports:

Fifth Third Bancorp will pay more than 13,500 employees a bonus and raise the minimum wage of its workforce to $15 an hour after the passage of the Republican tax plan that will cut the bank’s corporate tax rate. … Wells Fargo, meanwhile, also said it would be boosting its minimum wage for employees to $15 an hour, which was prompted by the tax plan. The San Francisco-based bank also said it would target $400 million in donations to community and nonprofit organizations next year.

The Daily Caller adds:

Boeing announced an “immediate commitment” to investing an additional $300 million in three areas that will directly benefit their employees:

  • $100 million for corporate giving, with funds used to support demand for employee gift-match programs and for investments in Boeing’s focus areas for charitable giving: in education, in our communities, and for veterans and military personnel.
  • $100 million for workforce development in the form of training, education, and other capabilities development to meet the scale needed for rapidly evolving technologies and expanding markets.
  • $100 million for “workplace of the future” facilities and infrastructure enhancements for Boeing employees.

Dennis Muilenburg, President, and CEO of Boeing praised the new tax reform bill, saying that it is critical for Boeing sustained long-term growth. … Comcast announced that they will give $1,000 bonuses to over 100,000 “eligible frontline and non-executive employees” & invest $50 billion over the next five years in infrastructure “based on the passage of tax reform.”

It turns out that employee pay and benefits are affected by how the business is doing. It also turns out that corporate charitable contributions are also affected by how the business is doing. More profits are better. The Tax Foundation claims:

  • According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, and an additional 339,000 full-time equivalent jobs.
  • The Tax Cuts and Jobs Act is a pro-growth tax plan, which would spur an additional $1 trillion in federal revenues from economic growth, with approximately $600 billion coming from the bill’s permanent provisions and approximately $400 billion from the bill’s temporary provisions over the budget window. These new revenues would reduce the cost of the plan substantially. Depending on the baseline used to score the plan, current policy or current law, the new revenues could bring the plan closer to revenue neutral.
  • Over the next decade, the Tax Cuts and Jobs Act would increase GDP by an average of 0.29 percent per year; GDP growth would be, on average, 2.13 percent, compared to 1.84 percent. In 2018, GDP growth would be 0.44 percent over the baseline forecast.

Even if all the benefits of this tax cut were not happening, there is one overriding reason to support this tax cut: It’s your money. Whether you spend it or put it away for future use, what you do with your tax cut will work for you far better than government ever will. There is, in fact, no unit of government in this nation that works even at a mediocre level of competence. There is no problem in this nation that more government and more government spending will fix.


One thought on “The tax cut, and it’s about time we had one

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s