Trump’s Pro-Worker Tax Cut
Left-wing political groups are staging street protests and running television ads to defeat President Trump’s proposed corporate tax cut. If they succeed, the big losers will be anyone hoping for a raise or looking for a better job.
Top Democrats like Sens. Elizabeth Warren and Bernie Sanders are complaining about tax cuts for wealthy corporations. MoveOn.org and the Working Families Party are paying for ads opposing even “one penny” of tax breaks to corporations.
Don’t be bamboozled. You don’t have to be a business owner to benefit from business tax cuts. If your goal is more take-home pay, these tax cuts will help you.
What the Democrats’ class warriors aren’t telling you is that business tax rates in the United States are higher than in any other developed country, making it hard for American companies to compete for investment capital. That disadvantage is worsening as many European countries cut their business taxes even further.
Once corporate rates are lowered, American companies will use the invested money to buy more computers, trucks and high-tech manufacturing tools. And hire more computer operators, truck drivers and factory workers. The new equipment will increase the output of each worker.
That’s key. When workers produce more per hour, their wages can rise. A backhoe operator can earn more than a guy with a shovel.
When workers produce more, the nation also has more goods and services to go around — more cars in the driveway and appliances in the kitchen. A higher standard of living. During the Obama years, the economy sputtered along at an average 2.1 percent growth a year, far below the 3.8 percent Americans were used to. Why? Companies failed to invest in equipment to boost worker output, and wages stagnated, as even Democratic Senate Minority Leader Chuck Schumer admits.
Americans toiled year after year, but their standard of living didn’t improve.
President Trump campaigned promising to jumpstart the economy. His goal is 3 percent growth, maybe even 4 percent. A goal Democrats mock.
They say slow growth is inevitable — that 2 percent is the new normal. No doubt under their policies it is. President Barack Obama’s tax hikes and regulatory war on business kept the brakes on economic recovery.
Unless these Obama-era policies are changed, the Congressional Budget Office forecasts that we will face more stagnation ahead, a paltry 1.9 percent annual growth. Democratic politicians might be OK with that, but you shouldn’t be.
Democratic apologists like economist Larry Summers insist stagnation is here to stay. That’s nonsense. America can escape it. Morgan Stanley’s Global Investment Committee forecasts a surge in worker productivity if the nation embraces pro-growth policies.
Step one: Cut corporate taxes. High taxes are sabotaging our workforce. Yet Warren actually wants to raise them for the sake of fairness. What’s fair about depressed wages?
Democrats stoke envy and argue over how to divvy up the pie instead of expanding it. They seldom talk about growth.
What a difference from 1961, when Democratic President John F. Kennedy took office. Facing a stagnant economy, JFK slashed business taxes, and after his assassination, Congress enacted the rest of his tax cuts, igniting years of robust growth. It can be done again.
Right after Labor Day, Trump and congressional Republicans will begin the push for tax reform. In addition to lowering business taxes, they want to simplify the tax code and lower rates across the board for individual tax filers. That’s laudable, but expect controversy over what deductions to keep and loopholes to close. The GOP may not have the time or the votes for that.
The single change they must accomplish — for the sake of millions of wage workers who haven’t seen their take-home pay increase in years — is corporate-tax cuts. Democrats have given up on growth. But the rest of us can’t afford to.
Betsy McCaughey is a senior fellow at the London Center for Policy Research.