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Tags: trump | economic policy | gdp | revenue | tax reform

Trump Economic Policy Comes to Full Bloom With Tax Reform

Trump Economic Policy Comes to Full Bloom With Tax Reform
President Donald Trump speaks about the passage of tax reform legislation on the South Lawn of the White House in Washington, D.C., December 20, 2017. (Saul Loeb/AFP/Getty Images)

Michael Dorstewitz By Wednesday, 20 December 2017 04:00 PM EST Current | Bio | Archive

The Senate set the final piece of President Donald Trump’s plan for economic recovery into play with its passage of the Tax Cuts and Jobs Act.

While the Trump doctrine as it relates to foreign policy is stated in two words, “America First,” his domestic doctrine is best expressed by an observation of another president nearly 100 years ago: “The business of America is business.”

The principle behind President Calvin Coolidge’s words is the driving force of the current administration plan for unprecedented economic growth.

And it’s working.

Implementing the Trump Doctrine, Domestic Style

To that end, the president initiated a three-front campaign to get America working again and get government off its back — decrease regulation, shrink government, and reduce the tax burden.

So far he’s well on his way to loosening the stranglehold of federal regulations that restrict growth.

"The never-ending growth of red tape in America has come to a sudden, screeching and beautiful halt," Trump said last week. "We're going to cut a ribbon because we're getting back below the 1960 level, and we'll be there fairly quickly."

Secondly, he’s been steadily reducing the federal workforce. Within its first six months, the Trump administration slashed nearly 11,000 jobs, according to a July jobs report released by the Bureau of Labor Statistics.

As a result, the Consumer Confidence Index shot up to its highest level in 17 years, the Dow soared above 24,000 for the first time ever, and Small Business Optimism hit a near all-time high.

But it wasn’t just business owners who reaped the rewards — middle class blue collar workers did also. Salary increases of factory workers, builders, and drivers surpassed those of managers and professionals under the Trump administration.

In contrast to the lackluster Obama economy, growth in GDP under Trump hit three percent for two quarters in a row.

The Obama administration was the first to never have a single year of three percent growth.

Tax Reform: The Trump Playbook’s Final Game Piece

Tuesday night the Senate approved 51-48 the third and final leg of Trump’s economic program — a tax reform package, a Christmas gift the president promised to the American people.

The legislation — like anything created by a committee — is neither as comprehensive nor as simple as most Republicans would like. The House’s four tax brackets were rejected in favor of the Senate’s seven. The hypothetical “tax return on a postcard” standard wasn’t met and the president didn’t get the hedge fund carried interest loophole eliminated as he wanted.

Notwithstanding its shortfalls, the Tax Cuts and Jobs Act will be a huge boon to the economy. The majority of taxpayers will see the savings every payday in the form of lower withholding taxes in 2018.

The corporate tax rate’s huge reduction will benefit corporate America and lead to job creation. It will also straighten the U.S. dollar on the world stage, according to Athanasios Vamvakidis, the global head of G10 FX Strategy at Bank America Merrill Lynch.

He reasons that reducing corporate taxes would boost annual GDP growth, lead to the return of offshore corporate funds for use in domestic capital expenditures, and could force the Federal Reserve to raise artificially low interest rates. Each would boost the dollar.

Lower Taxes Equal Higher Revenues

The tax reduction’s ultimate benefit, however, is increased tax revenues. Harding used the principle to increase government revenue, as did President John F. Kennedy decades later.

"It is a paradoxical truth that the tax rates are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut rates now," he said during an address at the New York Economic Club.

The late President Ronald Reagan agreed.

"The more government takes in taxes, the less incentive people have to work,” he said. “If, on the other hand, you reduce tax rates and allow people to spend or save more of what they earn, they'll become more industrious; they'll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all — and more revenue for government."

“The business of America is business.” When business succeeds, America and its people succeed.

Coolidge believed that reducing both taxes and the size of government was more than an economic necessity — it was a moral responsibility. And it’s the key to economic recovery. One hundred years later it still applies.

Michael Dorstewitz is a retired lawyer and has been a frequent contributor to BizPac Review and Liberty Unyielding. He’s also a former U.S. Merchant Marine officer and an enthusiastic Second Amendment supporter, who can often be found honing his skills at the range. To read more of his reports — Click Here Now.

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MichaelDorstewitz
While the Trump doctrine as it relates to foreign policy is stated in two words, “America First,” his domestic doctrine is best expressed by an observation of another president nearly 100 years ago: “The business of America is business.”
trump, economic policy, gdp, revenue, tax reform
798
2017-00-20
Wednesday, 20 December 2017 04:00 PM
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