“At the heart of our plan is a tax cut for everyday, working Americans.” – President Trump
Speaking to the Heritage Foundation last night President Donald Trump pledged to defend “our God-given rights.” The speech comes as Trump attempts to shore up support ahead of a tax reform push. The Administration is aiming to push tax reform through by December, but given Congress’s historic lack of productivity, many are doubting that such lofty goals will be accomplished.
“Freedom is not a gift from government. Freedom is a gift from God. That is why we’re here tonight, to rededicate ourselves to the defense of our God-given rights.” -President Trump
Trump also noted that “at the heart of our plan is a tax cut for everyday, working Americans.” With Obamacare reform appearing to be dead in the water, the White House is pivoting to tax reform.
Secretary of Treasury Steven Mnuchin has provided an “absolute guarantee” that tax reform will be passed this year. If not, he warned, markets would tank. Specifically, Mnuchin said:
“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done.”
Mnuchin went on to warn that if tax reform looks “dead” stock markets will likely suffer a sharp correction. The Dow Jones Industrial Average has surged by about 25% since Trump took office. With the global economy on solid grounds, it’s unclear if the recent stock market surge is the direct result of optimism over Trump’s policies or larger macroeconomic trends.
Trump has been less optimistic about signing tax reform this year. The President has noted that it took Reagan several years to push through comprehensive reform. While President Trump would like to sign a tax reform bill this year, the difficulty with repealing Obamacare suggests that a major overhaul may not be possible.
“You understand that lower taxes mean bigger paychecks, more jobs and stronger growth.” -President Trump
Trump has pledged to lower taxes in an effort to spur stronger job and economic growth. However, how these tax cuts will be paid for remains elusive. With American public debt having topped $20 trillion dollars, even many tax and spend democrats are starting to fret.
The President has argued that reductions in tax revenues will be offset by surging economic growth. However, such economic theories have largely been discredited in the past. Even President Reagan was forced to raise taxes after expected revenue growth never materialized.
Further, it’s unclear who will benefit from tax cuts. Many of the plans currently being floated appear to favor hefty tax cuts for the wealthy while offering little to middle-income Americans. In some cases, taxes on the middle class could actually rise. Of course, with no concrete bills proposed, it’s hard to measure and predict the costs and impacts of would-be tax cuts.
