Trump turn­around puts new tax-cut writ­ing on the wall

Starkville Daily News - - FORUM -

Fi­nan­cial mar­kets and most me­dia pun­dits are miss­ing the new writ­ing on the wall.

For a va­ri­ety of rea­sons sur­round­ing shrewd moves by

Pres­i­dent Trump, the chances for sig­nif­i­cant tax cuts in the next 10 weeks have risen sharply.

Since the Char­lottesville blowup in mid Au­gust, when the pres­i­dent's for­tunes were at low ebb — and I'll re­peat my view that there's not a racist, hate­ful, white su­prem­a­cist bone in Trump's body — we've wit­nessed a dra­matic ex­ec­u­tive turn­around. Trump beau­ti­fully han­dled the Har­vey and Irma emer­gen­cies. His bi­par­ti­san po­lit­i­cal pivot to Senate Mi­nor­ity Leader Chuck Schumer and House Mi­nor­ity Leader Nancy Pelosi to keep the gov­ern­ment open and raise the debt ceil­ing was clever in­deed. As econ­o­mist Steve Moore puts it, POTUS pub­licly spanked Repub­li­can lead­ers House Speaker Paul Ryan and Senate Ma­jor­ity Leader Mitch McCon­nell. And though there's plenty of con­fu­sion about im­mi­gra­tion re­form, it's clear now that 800,000 re­cip­i­ents of the De­ferred Ac­tion for Child­hood Ar­rivals pro­gram won't be de­ported for at least two years, if ever.

Some polls show the pres­i­dent's ap­proval near­ing 50 per­cent. The pub­lic likes what it sees.

And, most im­por­tantly, Trump has cleared the decks for tax cuts and re­form.

Make no mis­take: Trump is ab­so­lutely com­mit­ted to tax cuts. This is com­pletely un­like the health care mud­dle. And crit­i­cal here is the ar­gu­ment Trump is mak­ing: A big drop in large- and small-busi­ness tax rates will mostly ben­e­fit mid­dle-class wage earn­ers.

Re­search from Kevin Has­sett, for­merly of the Amer­i­can En­ter­prise In­sti­tute, or AEI, and now chair­man of the White House Coun­cil of Eco­nomic Ad­vis­ers, shows that about 70 per­cent of the ben­e­fits of busi­ness tax cuts go­ing to wage earn­ers. This is not a tax cut for the rich, as Johnny-One-Note Democrats in­sist.

There are two big num­bers stand­ing atop Trump's tax plan: 3 per­cent and 15 per­cent. Three per­cent is the new growth path that will nor­mal­ize Amer­ica's econ­omy and gen­er­ate at least $3 tril­lion of ad­di­tional rev­enues over 10 years (or sooner). This is the mother of all pay-fors. Fif­teen per­cent is the cor­po­rate rate that will spur in­creases in cap­i­tal for­ma­tion, busi­ness in­vest­ment, pro­duc­tiv­ity and real wages.

The Repub­li­can estab­lish­ment says it can't be done. It'll only risk drop­ping the busi­ness rate from 35 to 25 per­cent. But Trump wants the full 15. So does his Trea­sury sec­re­tary, Steven Mnuchin. Other than the pres­i­dent, Mnuchin, whom I call the "apos­tle of growth," is the only administration of­fi­cial to keep up the drum­beat for 3 and 15 per­cent.

Aparna Mathur of AEI notes that at 39.1 per­cent, in­clud­ing state taxes, the U.S. has the high­est statu­tory rate among G-20 na­tions. (China is 15 per­cent.) And our av­er­age cor­po­rate rate, which is to­tal taxes paid as a share of in­come, is 29 per­cent, third high­est in the G-20.

So, echo­ing the pres­i­dent, if we want to build out in­vest­ment, jobs and wages, bring back over­seas prof­its, stop Amer­i­can com­pa­nies from go­ing over­seas and make the in­vest­ment cli­mate in Amer­ica top in the world, we need a big-bang slash of our busi­ness tax rate.

It's not a mat­ter of bean count­ing. It's a mat­ter of growth-ori­ented eco­nomic pol­icy.

Trump is ending for­mer Pres­i­dent Obama's wars on busi­ness and suc­cess. He's halt­ing the war on fos­sil fu­els. And he's vir­tu­ally rolling back the reg­u­la­tory state. The Of­fice of Man­age­ment and Bud­get re­ports that roughly 800 pend­ing reg­u­la­tions have been frozen, rolled back or re­clas­si­fied in the administration's first seven months.

Slash­ing the busi­ness tax rate is the nec­es­sary com­ple­ment to this reg­u­la­tory re­lief. And GOP law­mak­ers have 10 weeks to do it. Can they? Will they?

Here's some progress: It looks like House

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LAWRENCE KUDLOW

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