Donald Trump’s campaign theme was “Make America Great Again.” In an effort to make that happen, Mr. Trump promised to revive our sluggish economy with the largest income tax cuts since Ronald Reagan, tax simplification and rolling back government regulations that hamstring businesses.
He also promised to slash the corporate income tax rate from 35% (one of the highest in the world) to 20% or less. Trump also talked about a special 15% one-time tax on the estimated $2.5-$3.0 trillion in corporate profits that are being held in foreign countries, to encourage them to bring that money back to the US. Together, these corporate tax breaks should be a big boost for the US economy.
Yet in an editorial earlier this week, FORBES Editor-in-Chief Steve Forbes called for President-elect Trump to go for even bigger and bolder tax cuts as soon as he is inaugurated on January 20. I have reprinted that editorial for you below.
Why Trump’s Tax Cuts Should Be Big And Bold
Crucial to Donald Trump’s success as President is a vigorous economic revival, and key to that is a big tax cut. Both the tax plan Trump issued during his campaign and the one put out by House Republicans are pro-growth. But pressure is growing to scale down the scope of a tax bill, such as delaying reductions for individuals. Timidity here would be a big mistake.
The incoming administration should expand its tax package when it formally takes office. As Ronald Reagan did with his tax reform in 1986, it should reduce the brackets to two: in this case, 25% and 10%; it should also cut the levies on capital gains from 23.8% (this includes a 3.8% ObamaCare add-on) to 15% or less.
Revenues would go up, as they always do when this tax is reduced. Do the same with dividends. Combined with slashing the tax on profits for corporations and so-called passthroughs to 15%, these measures would help stimulate the creation of new businesses, not to mention energizing consumers and investors. Progress is impossible without investment, and that can’t happen without capital creation.
Substantially expanding exemptions for adults and children would neuter the inevitable Democratic charge of favoring the rich. Boosting the earned-income tax credit, which gives rebates to low-income earners, even if they owe no income tax, would also minimize political fallout. In fact, it would be politically wise to pretend that the Democrats made this happen.
The left will also cry these tax cuts “aren’t paid for” and will balloon the budget deficit. So nice that the Democrats are suddenly concerned about Uncle Sam’s red ink. The key is whether the economy booms as it did in the 1980s – back then, even though the national debt more than doubled by expanding $1.7 trillion, the net wealth of the nation soared $17 trillion.
The economy blossomed, and U.S. high tech became the envy of the world. Remember, Washington is supposed to be run by we the people, not the other way around.
By going bold the Trump White House would be better able to mobilize public support and would have more maneuvering room when negotiating with Congress.
As Mr. Forbes points out, the gamble is whether or not the US economy will boom as it did in the 1980s, assuming President Trump gets all of the tax cuts he wants. While no one knows for sure, there is one huge difference today.
In 1981 when President Reagan got most of his tax cuts passed, the national debt was just under $1 trillion. Today as you know, our national debt is almost $20 trillion. Who knows how much of a difference that will make? It’s indeed a gamble.
Wishing you a MERRY CHRISTMAS & HAPPY HOLIDAYS!
With Christmas just a few days away, let me and all of us at Halbert Wealth Management extend our best wishes to you and your loved ones at this very special time of year.
Christmas for the Halbert family is usually a time for the whole clan to get together at our house to enjoy family and celebrate the holiday. This Christmas will be a little different since we will be spending time with Debi’s 98 year-old Mother and our two adult kids on different days throughout the next week. Even though we all won’t be together in the same place at the same time, it will be special nonetheless.
I hope you have a wonderful Christmas or whatever holiday you may be celebrating.
Thank you for your support, and may God Bless you and yours this holiday season!!