Bad call on tax cuts

Sen. Elizabeth Warren is wandering into unfamiliar territory with her call for a reversal of the Trump tax cuts. Ripping up the tax code each time the majority in Congress changes hands is unproductive and most likely detrimental to the economy. For tax policy to work as intended, it must be tweaked and given time to develop. No economist should be surprised that when tax brackets are lowered, receipts dip. But taxpayers modify their behavior as they adjust to lower withholding. Personal consumption, consumer confidence and business activity eventually increase. As a result, tax receipts rise. Aided by carefully considered monetary policy and absent any unforeseen shocks, tax receipts should continue to rise with economic expansion.

Of course, Sen. Warren’s real aim is to whip up support on the left by claiming taxes or tax rates are an “expression of our values.” A serious legislator would recognize that raising tax rates on personal and corporate income before the ink is even dry on the biggest tax reform legislation in three decades is a huge step backward. Let’s leave the tax code alone for a while and let the economy work as intended. We may find that after years of sluggish growth, tax reform encourages and incentivizes higher output and productivity, leading to much higher than anticipated tax receipts.

— Sean F. Flaherty, Charlestown