Wait­ing for Trump tax re­lief

The an­tic­i­pated cuts would bring on the promised ro­bust re­cov­ery

The Washington Times Daily - - EDITORIAL -

“Ev­ery­thing in mod­er­a­tion” can be sage ad­vice, es­pe­cially when it ap­plies to gov­ern­ment and glut­tony. When the ad­min­is­tra­tive state sticks to its proper lim­ited role, costs are con­tained and taxes are bear­able. But the bloated ad­min­is­tra­tive state snacks on bil­lions and feasts on tril­lions. As Amer­i­cans hus­tle to file their last-minute tax re­turns for 2016, Don­ald Trump’s promised re­lief is ob­vi­ously too late to lessen the bur­den this tax sea­son, which ends Tues­day. If help doesn’t come soon, hope for an era of re­newed pros­per­ity will soon be but a fad­ing mem­ory.

Re­al­ity can make a hash of hope, and the wreck­age of the Repub­li­cans’ Oba­macare re­peal-and-re­place ob­structs the path to tax re­form. Pres­i­dent Trump is re­luc­tant to aban­don the scene of the leg­isla­tive crime and the tril­lion dol­lars in sav­ings he ex­pected, but Repub­li­cans can’t af­ford to linger much longer. Un­less they quickly re­pair and pass their bill, con­tin­ued tin­ker­ing would sim­ply com­pound the pub­lic’s grow­ing per­cep­tion of con­gres­sional in­com­pe­tence.

It’s time for Trump tax cut plans to be brought front and cen­ter. An­a­lysts have pre­dicted re­duc­tion in tax rev­enue could cost the Trea­sury be­tween $2.6 tril­lion and $10 tril­lion over 10 years — a scary thought — but with bud­get cuts and a lit­tle pa­tience, they could boost tax re­ceipts over the long term. Ron­ald Rea­gan demon­strated this with his 1981 Eco­nomic Re­cov­ery Tax Act, which gave all Amer­i­cans a 25 per­cent tax cut. Deficits spiked from $128 bil­lion in 1982 to $221 bil­lion four years later, and then set­tled back to $152 bil­lion only three years after that.

Mr. Rea­gan’s se­cond round of tax cuts, the Tax Re­form Act of 1986, con­sol­i­dated ex­ist­ing tax brack­ets into two — 15 per­cent for mid­dle-class fam­i­lies and 28 per­cent for the rich. The de­layed ef­fect was a rapid es­ca­la­tion of tax rev­enues from $618 bil­lion in 1982 to $991 bil­lion by the end of the decade. The aver­age gross do­mes­tic prod­uct grew by 3.5 per­cent, mak­ing for an era of pros­per­ity that hasn’t been re­pro­duced since. It was done by cutting taxes.

Dur­ing fiscal 2016, the gov­ern­ment col­lected $3.27 tril­lion in taxes but, like a kid with his daddy’s credit card, spent $3.85 tril­lion, leav­ing a deficit of $587 bil­lion. The gov­ern­ment col­lected $1.47 tril­lion in just the first half of fiscal 2017 while run­ning a deficit of $527 bil­lion, nearly as large as all of last year.

A bit of courage is required to for­swear tax rev­enue for a sea­son and watch deficits grow, but only tem­po­rar­ily. Un­easy con­gres­sional Repub­li­cans have been toy­ing with the idea of a bor­der ad­just­ment tax to make up for lost rev­enue. But im­pos­ing levies on for­eign prod­ucts would boost prices for U.S. goods, tak­ing from consumers’ pock­ets. Repub­li­can law­mak­ers must trust the power of growth and en­act a sim­ple tax re­form plan that can at­tract enough votes to get re­form to the pres­i­dent’s desk.

Ron­ald Rea­gan un­der­stood that Amer­i­cans thrive on op­por­tu­nity. En­abling Amer­i­cans to keep more of the fruit of their la­bor inspires big dreams and the en­ergy to make dreams come true. With the Trump ad­min­is­tra­tion clos­ing in on its first hun­dred days, the op­por­tu­nity to pur­sue some­thing good and true is slip­ping away. Tax Day brought no re­prieve this year, and Pres­i­dent Trump must make cer­tain a tax re­duc­tion deal be­comes a re­al­ity be­fore the next tax sea­son ar­rives. The sur­vival of a lot of con­gress­men de­pends on it.

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