• Nick Sorrentino

To get tax cuts keep it simple and be bold

This was originally run at, August 28, 2017 by Nick Sorrentino

This is key. People don’t like lots of levers and pulleys in their legislation. You know who DOES like the Rube Goldberg machines that pass for laws in this country? Lobbyists. (And their crony sponsors.) The more complex the bill – witness Obamacare – the more opportunities there are for cronies to carve out deals for themselves. The taxpayer is usually the one who loses. Actually the taxpayer is always the one who loses. If Congress wants voters to get on board with tax cuts keep it simple as Stephen Moore suggests.

His recommendations (in the attached article) are not unreasonable. They are not radical. They are pretty common sense.

One key sticking point however is the idea that any tax cuts be “revenue neutral.” (As Moore identifies.)

Some in Congress say they might be OK with tax cuts so long as money is raised from other taxpayers, via a carbon tax, or a border tax, or something else. Something with lots of levers and pulleys of course.  

(Why would a carbon tax be revenue neutral over the medium to long term? Isn’t the idea to reduce carbon emissions with such a tax? As such wouldn’t this mean that over time – according to proponents – that revenue would decrease as carbon emissions decreased?

However if carbon tax revenue became a real source of revenue for the government there might be a perverse incentive to actually create policy that INCREASES carbon emissions. In fact this would be very likely.)*

But “revenue neutrality” misses the point. We want to let the economy breathe. The WHOLE economy and as such just shuffling around the spoils the government gets just creates distortions and inefficiencies in other parts of the economy. “Revenue neutrality” is all about picking winners and losers. And the government shouldn’t do that.  So what to do? First make sure people don’t end up paying any more taxes with any tax cut. That is key. The mortgage deduction and the charitable deduction and frankly pretty much every deduction should remain. The idea again is to reduce the burden on the economy, to reduce the drag of taxes. If people have a means to avoid some taxes now, don’t take away these tools in any tax “cut.” That would be counter productive in the extreme.

But what about the deficit? What about the debt? Tax cuts will expand the deficit and debt we are told. (Usually by people who really couldn’t care less so long as they get their piece of taxpayer revenue.) Yes, this is true. But only if we don’t cut government as we cut taxes. This is of course the stickiest wicket. Politicians, even many/most Republicans, want to be able to redistribute wealth to their constituencies. Cutting government means cutting programs, and this means some people are going to be angry. Angry constituents sometimes get angry enough to vote members of Congress out. It doesn’t happen often but it does happen. Members of Congress would prefer to stay in Washington. But there is a hierarchy of economic choices and at the top must be tax cuts, or more accurately the freeing of the economy. Then we can worry about where best to cut government. (Yes, I know but we’ve got to cut taxes first, then put pressure on the big government people who say they are concerned about the deficit – which as we said they aren’t really.)

So cut taxes and keep it very simple. Present a different type of bill to the American people. Make the fight about ideas and bring it to the big political stage. Fight for cuts in clear, and easy to understand terms. Get rid of the ropes, and levers, and pulleys, and trap doors, that the lobbyists want. Present a simple tax cut. The American people will likely respond positively. Be bold. Be clear. And here’s an absolutely crazy idea for Washington, be honest for once.**

(From The Washington Times) Which brings us to the tax cut fight. Larry Kudlow, Steve Forbes and I (founders of the Committee to Unleash Prosperity) have been pleading with Congress to keep the debate focused on three simple reforms:
1) cut tax rates for large and small businesses to 15 percent to make America competitive and create jobs.
2) repatriate $2.5 trillion of money held by American companies back to the United States at a 10 percent tax rate. 3) double the standard deduction for every family and individual tax filer.
And that’s it. Hard stop. No border tax. No carbon tax. No surtax on rich people. No end of popular tax deductions. You can’t get the tax base broadened without a single Democratic vote helping you do it, so don’t try to roll this boulder up the hill.
This is a jobs bill that cuts taxes. Republicans are first and foremost a tax cutting party. President Trump himself has said it will be “the biggest tax cut since Reagan.” Revenue neutrality is a bad idea that will kill tax reform. If one person’s taxes go up to pay for someone else’s to go down — there’s not much economic gain and the loser is going to make a lot more noise than the winner. With a tax cut everyone wins.

Click here for the article.

*For our reader’s information I have long studied a carbon tax and have respect for the people pushing for it. But they are wrong. **I say this as a deeply cynical observer of government.