To listen to the mainstream media one would believe that the sky is quite literally getting ready to fall and the fault for that dilemma and the imminent peril of all mankind rests directly at the feet of President Donald Trump and his policies. Yet is there any truth to that? Or is it simply the same partisan melodrama, aided and abetted by a feckless mainstream media working as the propaganda arm of the Democratic party?
Well, one only needs to take a look at the recent economy to make that assessment and it is happening again – tax receipts soared in America after the recent tax cuts approved by President Trump. U.S. state and local government tax revenue climbed to $350.2 billion in the first quarter of 2018, a rise of 5.8 percent compared with the same time period in 2017.
Individual income tax collections had big gains for a second-straight quarter with a 12.8 percent increase to $107.4 billion in 2018’s first quarter.
But I thought President Trump’s policies were going to destroy the economy! Except this summer will go down as one of the more prosperous in United States history where Americans have more money in their own pockets with the ability to enjoy trips and family vacations, thus generating more revenue and so the cycle goes.
Where is the promised doom and gloom? When exactly is the sky going to fall?
More positive results in that President Trump’s tax cuts have actually resulted in a GAIN of federal revenue – not that you would ever know that by listening to the mainstream media, especially with the recently created hysteria surrounding the US/Russia Summit in Helsinki.
Despite the cut in tax rates — brought forward by the introduction, in February, of revised tax withholding tables — federal income tax revenues for the first half of 2018 are 9 percent higher than in the first half of 2017.
The difference comes to $76 billion of unanticipated revenue…
Indeed, the Treasury Department’s monthly reports suggest that, despite the tax cut, actual revenues for 2018 will exceed those of 2017.
In explaining the turnabout, the CBO says the increase “largely reflects increases in wages and salaries.”
It is clear the impact of tax cuts is much more positive for growth and that has been proven over and over again with multiple studies making the same conclusion in more than 170 cases.
The evidence of the positive impact of lower corporate taxes is found in growth, jobs, and wages and the findings have repeatedly been published with examples of more than 200 cases in 21 countries demonstrating tax cuts and expenditure reductions are much more effective in boosting growth and prosperity than increasing government spending.
Yet Democrats continue to spout their socialist ideologies denying the positive impact of tax cuts with claims that they simply make deficits rise. The fallacy of this argument has nothing to do with tax cuts, but instead with increases in government spending in addition to tax cuts. Simply put those that use this argument believe that governments will spend any and all revenues, and in some cases even increase spending.
These are the same people that are against a balanced budget and refuse to be accountable to the very people whose wages make their jobs possible. This is wrong – the marks of good leadership show that one never asks the people to do something that you yourself are not also willing to do. Yet these people expect that very thing, expect the American people to continue to sacrifice while they live lean and work harder for less.
This is the philosophy of so-called economist Paul Krugman. He argues in an article penned for the New York Times entitled – “Time to Borrow” written just after the Obama administration increased debt by $10 trillion. Krugman defends deficit spending, yet considers tax cuts as negative simply on the basis that deficits MAY increase. Only Keynesian economists manage to pull off such mind-bending logic.
Deficits need not rise or even exist in the first place if government spending stays in line with revenue growth. It is simple math – Do not spend more than you have.
Chief Economist Daniel Lacalle states in the Epoch Times speaks of the causes of deficit spending and the negative effects of it –
“While analyzing the deficits of the G-20 economies during the past 15 years, we found that more than 80 percent come from higher spending. Even in the 2008–2010 crisis, European government deficits were explained more by the “stimulus” plans and government spending increases than any loss of revenues.
Spain, for example, lost 40 billion euros of tax revenues from the bursting of the real estate bubble but deficits rose by 300 billion euros, driven by stimulus and automatic “stabilizers.”
The European Union spent almost 1.5 percent of its GDP on stimuli and increased taxes, sending deficits and debt to GDP to all-time highs. The United States increased taxes by $1.5 trillion under the Obama administration but the average deficit was 5 percent of GDP. The final tally was a $10 trillion increase in national debt.
During the Obama administration and the massive expansionary monetary policies of three rounds of quantitative easing (QE) and ultra-low interest rates, economic growth on average was only 1.4 percent and 2.1 percent if we exclude the crash year of 2009. That compares to an average of 3.5 percent during the Reagan administration, 3.9 percent during Clinton’s, and 2.1 percent during Bush Jr.’s.”
As we are currently seeing the evidence of the positive effects of tax cuts on jobs and growth is clear and we are currently reaping the benefits. The recently released 2018 “Economic Report of the President” shows that tax cuts generated more federal revenues even after adjusting for inflation and population growth.
Still not convinced? Lacalle cites historical examples as well, further driving home the benefits and positive effects of tax cuts on the economy
“President John F. Kennedy’s major tax cut, which included chopping the top marginal rate to 70 percent from 91 percent, became law in early 1964. The economy grew at an average 5.5 percent, and unemployment fell to 3.8 percent. In turn, the annual deficit shrank to $1 billion from $7 billion as individual income-tax receipts nearly doubled.
President Ronald Reagan cut the top personal rate from 70 percent all the way down to 28 percent. Between 1982, when the first round of Reagan’s across-the-board tax cuts went into effect, and 1990, when President George H.W. Bush broke his no-new-taxes pledge, individual tax receipts jumped 57 percent to $467 billion.
And even President Bill Clinton’s budget surpluses didn’t materialize until after the president in 1997 signed a GOP tax bill that cut the capital-gains rate to 20 percent from 28 percent.
Tax receipts from capital gains soared as capital investment more than tripled. Between 1996 and 2000, “the increase in capital gains revenues accounted for a little over 20 percent of the total increase in federal revenues,” former Treasury official Bruce Bartlett said. For the first time, individual tax receipts hit $1 trillion.
After President George W. Bush in 2003 signed the largest tax cut since Reagan—including dropping the top marginal rate to 35 percent from 39.6 percent—government receipts from individual income taxes rose from $794 billion to a peak of $1.2 trillion in 2007, when the mortgage crisis began—a jump of 47 percent.
Stronger economic growth expanded the tax base and brought in so much revenue that Bush more than halved the deficit over that period.”
There is simply no public sector without a thriving private sector. One cannot tax themselves into prosperity, as taxes are neither a vehicle for growth, nor for job creation. Deficits are not an excuse, as a deficit should be addressed by a reduction in spending.
The current gain in revenue has done exactly that, cutting the predicted deficit in half. This means that even after the GOP cut taxes for Americans, the government is STILL taking in more money.
This is quite simply because as businesses do well, they expand and hire more people. They also increase wages, which results in people spending more money due to more residual income. More money is being pumped into the economy, resulting in additional tax revenue.
Tax cuts are a necessary tool to keep an ever-expanding bureaucratic system from destroying the economy. As taxes are raised, more unemployment goes up as does government dependency. Then a large swath of the population is under the thumb of the government – it is called communism and it kills.
Former Secretary of State Henry Kissinger said it best – “Control oil and you control nations; control food and you control the people.”
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