On September 17, I had the opportunity to report on how Joe Biden not only wants to increase taxes on US businesses and vast swathes of the working American populace, but also that he wants the feds to monitor your personal bank accounts to the most minute level, saying he asks: “…just, for two pieces of information from the banks of these folks: the amounts that come into their bank accounts, and what amounts go out of their bank accounts.”
This has inspired widespread indignation among the American populace, but virtual silence within the DC GOP leadership.
Likewise, Politico reports that, in a “private” meeting with other Dem politicians, House Speaker Nancy Pelosi (D-CA) stressed that as the House, Senate, and White House move, step-by-step, towards what could be a $6 TRILLION spending scheme (fueled by those taxes and a LOT of government debt) Pelosi wants the central planners to avoid mentioning the overall price-tag.
We should talk about what’s in the bill. ... Let’s not have a conversation about topline.
Which is an obvious tactic for someone who wants to play favorites with all kinds of welfarist constituencies – subsidizing broadband internet, pork construction projects in most states, and expansions of Medicare and Medicaid -- among many other wildly unconstitutional activities.
And it's irksome, to say the least, not only because it follows the typical leftist pattern of avoiding the economic albatross that is federal spending -- and the implications such spending presents for taxation, debt-financing, borrowing, and increased inflation of the money supply -- but also because Pelosi is the skillful rhetorician who once fatuously said about Obamacare that the politicians had to “pass the bill, so that you can find out what is in it.”
And, once more, it is revealing -- and vexing -- to see how tepidly GOP “leadership” is responding to this proposed increase in taxes and Pelosi’s attempt hide the burdens they will place on generations of Americans and the US economy.
Completely missing the point, Senate Minority Leader Mitch McConnell, merely chirped about the Dems having to “find the votes” to raise the virtually useless, government-defined, often disregarded, “debt limit,” saying, in part:
The debt ceiling will be raised as it always should be, but it will be raised by the Democrats.
That McConnell would take such a meek approach -- that he would not stand up against tax increases, but, instead, would take a proverbial Social Justice Warrior knee, and spew lines about what is, essentially, made-up book-keeping about federal debt -- is typical of the Country Club wing of the GOP.
And it energizes us to look to our own consciences, our own principles, and US economic history, and to demand that people such as Senator McConnell uphold the principles of freedom and TAX CUTS that have helped Americans prosper every time they have been instituted.
Even for a man who appears to be as disinterested in the salutary effects and moral primacy of lowering the tax burden, Mitch McConnell could strengthen his evidently weak knowledge-base if he merely looked back four years to Donald Trump’s 2017 proposal, and the 2018 enactment, of reductions in corporate taxes.
The legislation, which permanently slashed corporate tax rates from 35 percent down to 21 percent, was only signed into law last month. But more than 100 companies have already indicated that they will make big moves to benefit workers and the economy–including raising wages, handing out bonuses, granting 401(k) increases, and committing to increased capital investment–while citing the law’s reduction in the corporate income tax rate as at least part of the reason.
Sadly, nothing is permanent in politics -- except the polis imposing itself to varying degrees. But the cause-effect relationship between Trump’s move to lower taxes and subsequent betterment of livelihoods and benefits for American residents was evident, even early in Trump’s Presidency.
Of course, at that early stage, some Americans wondered why business owners might act even before the tax cuts were finalized. But, as Hoover Institution Fellow and Naval Postgraduate School economist David R. Henderson points out, when US-based business owners got a sense that Trump successfully would reduce corporate taxes, they acted as rational participants in a market economy do. They tried to anticipate and tried to appeal to good employees:
So, again, with employers anticipating a tightening labor market tightening even more with passage of the tax bill, it’s reasonable to attribute some of the increase to forward-looking employers trying to get ahead of the labor market.
And Henderson offers another salient thought about why those supposedly “evil” business owners might move to offer incentives prior to the passage of the Trump cuts:
Imagine that a company is going to give a bonus and is choosing whether to do so in 2017 or 2018. If it gives the bonus in 2017, it deducts that cost of labor from corporate income that faces a marginal tax rate of 35%. If it gives the bonus in 2018, it deducts it from corporate income taxed at a marginal tax rate of 21%. So, all else equal, it makes sense to give the bonus in 2017. (I’m ignoring state taxes on corporate income.)
The results of the Trump tax cuts – on businesses and on personal wages – were clear.
As I wrote in May, of 2019:
Recently Released Labor Department data shows that the unemployment rate fell from 3.8% to 3.6% at the close of the first quarter of 2019 (the lowest rate since 1969), that the US economy added 263,000 new jobs, and that Gross Domestic Product grew 3.2%.
Similarly, the Associated Press reported the unemployment rate hitting a 49-year low:
The unemployment rate for women fell last month to 3.1%, the lowest point since 1953. The rate for Latinos dropped to 4.2%, a record low since 1973, when the government began tracking the data… For Asians, joblessness has matched a record low of 2.2%. And the unemployment rate for veterans of the Iraq and Afghan wars dropped to 1.7%, also a record low.
And in 2018, the unemployment rate for African-Americans hit just 6 percent, a record low that stayed close to that until COVID19 lockdown mania gripped many state and local politicians.
Trump’s 2017 “Tax Cuts and Jobs Act” began what was planned to be $1.5 trillion in tax cuts over ten years, the twelfth-largest as a percentage of gross domestic product at the time of its passage. It not only saw the decrease in corporate taxes, it saw a near elimination of the pernicious “Alternative Minimum Tax,” a simplification of the tax code for most filers, a doubling of the Child Tax Credit, a near doubling of the standard deduction, and cuts in personal income taxes for virtually every category of wage earner.
Contrary to what the Democrats currently are touting as “cuts,” but really are expansions of the money-redistributing “Earned Income Tax Credit” (which, for years, has been the leftist go-to for claiming tax-cuts when they’re really expanding welfare payments), the Trump cuts really did allow people to keep their own money and not have it taken and steered towards political interests instead of real, honest, market competitors.
This is not a hagiography of Trump’s Administration, but this recent lesson about tax cuts is absolutely essential for McConnell to acknowledge and promote.
And the lesson isn’t just grounded in abstract numbers or ideas. These are people's lives and interests that can only be reflected in a free market, where earners can show their preferences as consumers, savers can offer their cash for investment in new ventures, suppliers can compete to lower costs, and new jobs can be created – jobs that reflect REAL value, not politicized decisions from Central Command.
As Nancy Pelosi tells her “team” to focus on the “programs” -- i.e. the feel-good manna she and the collectivists will shower on the people she seems to consider American livestock – Mr. McConnell and his milquetoast troupe of political performance artists might want to awaken to the reality that we in the “hinterlands” are fed up with being robbed, and that there are real-world, positive lessons about the ethics and economics of tax cuts that we MUST learn and retain.
Mitch McConnel needs to wake up, and stop playing by the Democrat playbook.