Tax reform’s wealth-building for average Americans should define election

Health care, immigration, trade policies, the never-ending “special investigations,” and the egregious hearings on Supreme Court Justice Brett Kavanaugh’s nomination have defined stark differences between America’s conservatives and liberals. But none has done so more precisely than President Trump’s tax reform policies and the resulting economic restoration of our country.

Progressive Democrats — many of whom have morphed into a type of socialists — believe that government is the source of all wealth and good policy. They despise the Republican tax cuts and tax reform legislation because tax cuts mean that government has (they have) less of other people’s money to give away.

{mosads}The December 2017 tax reform/tax cut bill, opposed by every Democrat in Congress, has unleashed a widespread resurgence of the American economy. It has produced higher pay and bonuses, more jobs and more opportunity, increased productivity — more of everything good for American workers and their families.

Minority Leader Nancy Pelosi (D-Calif.) — whose net worth of $16 million ranks her at No. 30 among the 50 wealthiest House of Representatives members — called the tax cut legislation benefits “crumbs.” Yet the reality is that the average family will be $26,000 to $45,000 wealthier in 10 years because of tax reform and tax cuts, according to Heritage Foundation studies. To understand how tax reform can achieve this, we must understand how the economy and the tax system works:

• Doubling the standard exemption and reducing all personal tax rates means lower-income individuals and families receive a greater proportional tax cut than wealthy Americans.  

• The corporate tax rate reduction from 35 percent to 21 percent was essential to make America competitive again in the world and to bring home fleeing companies and jobs, as well as the trillions of dollars parked offshore. Though Democratic leaders term this a “payoff to the rich and to Wall Street,” that’s dead wrong according to studies and tax models by economists Larry Kotlikoff (Boston University) and Alan Auerbach (University of California, Berkeley) published by the Goodman Institute of Dallas. They confirm that nearly 100 percent of corporate taxes are actually borne by workers in lower wages and fewer jobs.  

• The U.S. jobless rate has fallen to its lowest point in decades, including for women and minorities.    
• Because jobs available now outnumber U.S. workers by nearly a million, wages have been driven higher. And work requirements for public benefits will attract more people into our shrinking workforce, “manning the oars” instead of “enjoying a free ride.”

• Tax reform and tax rate reductions are central to the “wealth multiple” that individuals and families will enjoy over the coming years. It is a function of the annual growth rate of the economy. New economic Nobel laureate Robert Romer confirmed the “Rule of 72”: divide the annual economic growth rate into 72 to determine how many years it will take for the size of our economy to double for everyone’s benefit. At 4 percent annual growth, which we are enjoying, the economy doubles in 18 years. At the rate of 1.2 percent annual economic growth that we had during the Obama years, it would have taken 60 years to double the size of the economy and everyone’s wealth.

• Through rapid economic growth, we can bring down the size of government as a share of GDP while shrinking the deficit and national debt. While Democrats wring their hands and warn that tax cuts will increase the deficit, lower tax rates applied to a rapidly growing economy ultimately will increase federal tax receipts.

Tax reform — with its resultant rapid increase in the size of the U.S. economy relative to other nations and its wealth-growth bonanza for average Americans — should be the “no-brainer” centerpiece of the Nov. 6 elections. We must make it so by our involvement and turnout at the polls. Doing anything less would be a threat to our children and grandchildren.  

Lewis K. Uhler is founder and chairman of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He was a contemporary and collaborator with both Ronald Reagan and Milton Friedman in California and across the country.

Peter Ferrara a senior fellow with NTLF and teaches economics at King’s College in New York. He served in the White House Office of Policy Development under President Reagan, and as associate U.S. deputy attorney general under President George H.W. Bush.