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Ron Insana: Trump Tax Plan Just Rehash of Reagan's 'Voodoo Economics'

Image: Ron Insana: Trump Tax Plan Just Rehash of Reagan's 'Voodoo Economics'
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By    |   Thursday, 27 Apr 2017 03:23 PM

Economic guru Ron Insana claims that President Trump's tax reform plan “is nothing more than a recycled version of the supply-side nostrums first introduced by my friends, Larry Kudlow and Art Laffer, back in the early 1980s.”

“Once derided as ‘voodoo economics’ (that's what George H.W. Bush called Reagan's economic policies), the supply-side crowd has long held that tax cuts pay for themselves and do not require offsets to keep the federal budget in balance,” Insana wrote for CNBC.com.

“Not only is there a dearth of empirical evidence that tax cuts pay for themselves, but in the cases that proponents cite, there were other factors that fostered faster economic growth that may have been equally, or even more important, in boosting GDP than tax cuts alone,” Insana explained.

"[E]very economic stimulant known to man was used to goose the economy in the 1980s, and despite extremely strong growth, there remains no evidence that the tax cuts were revenue neutral in any way, shape, or form," wrote Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street.

“So, while a massive tax cut would be welcome to those who would benefit from it (and it's still mainly the top 5 percent of all wage earners), let's call tax reform what it is … an unfunded liability that boosts growth but busts the budget,” Insana wrote.

However, not everyone is so pessimistic.

Some bsuiness owners and small business groups hoped the dramatic cuts in corporate and personal taxes proposed Wednesday could mean more savings to invest in their businesses and more revenue coming in from consumers and businesses with some extra money to spend.

Under President Donald Trump's proposal, small businesses owners who pay their business taxes at personal tax rates would see their top rate go from 39.6 percent to the proposed corporate tax rate of 15 percent. Those owners are sole proprietors, partners or shareholders in what are called S corporations, or pass-through entities, which under the tax laws are intended to be small or mid-sized companies, the Associated Press reported.

Nearly 80 percent of businesses are pass-through entities, a survey by the National Small Business Association advocacy group found this year. The remaining companies also stand to get a break on their rates, which would fall to 15 percent from 35 percent.

There are still many unknowns about the Trump proposal, in particular, what changes Congress might make to offset the drop in tax revenue that lower rates would likely bring.

The National Small Business Association also liked the proposal but was wary about what will happen when it reaches Capitol Hill.

"Look at what happened with the health care bill," said Molly Day, a spokeswoman for the group. "I don't know that there's going to be a lot of optimism that this is going to get done."

(Newsmax wires services contributed to this report).

© 2017 Newsmax Finance. All rights reserved.

 
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CNBC's Ron Insana claims that President Trump's tax reform plan "is nothing more than a recycled version of the supply-side nostrums first introduced by my friends, Larry Kudlow and Art Laffer, back in the early 1980s."
Ron Insana, Trump, Tax, Plan, Reagan, Voodoo, Economics
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2017-23-27
Thursday, 27 Apr 2017 03:23 PM
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