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Where Are The Tax Cuts, Mr. President?

Simon Constable

Since taking office a few weeks ago Donald Trump has done some good things for the economy, such as lifting the burdensome regulatory apparatus imposed by the previous administration.

What's lacking is major tax reform. It needs to go to the top of the agenda right now. It should stay there until completed. Here are some reasons:

  • It's an easy political win on Capitol Hill. The Republicans hold both houses of Congress and lower taxes are well within the party's platform. Some Democrats like lower taxes too.
  • It's an easy political win on Main Street. The tax code for individuals is way too complicated and way too high. Lower taxes would help lift the new president's poll ratings, and so give him the political capital to deal with other more controversial topics such as health insurance reform. Most people hate paying taxes, so the lower they are the better.
  • Lower business taxes should help attract foreign capital to the U.S. economy and so spur economic growth. The U.S. tax rate is hopelessly out of whack with that of other developed nations. Within a few years, Britain will reduce its business tax to 17%, less than half the U.S. rate of 35%.
  • Simpler tax codes mean more money can be spent on real economic output rather than paid to tax attorneys who may help avoid the taxes.
  • Lower taxes for people mean more cash in household budgets. Given the psyche of Americans, they will likely spend a good chunk of the extra cash. That will lift economic growth and improve the jobs market.
  • Increased growth and employment solves a lot of problems that people are worried about -- such as the inability to afford health insurance. Remember, when people have more cash in their pockets they have more choices, and that means some problems vanish for them. For example, availability of free contraception isn't so much of an issue when more people have the cash to pay for it themselves.

  • The president needs to forget the border adjustment tax. It's not good for consumers because it will likely raise the prices of consumer goods. It has also divided the party. The BAT matter is an international trade issue not one of tax, the moniker notwithstanding. Issues related to imports/exports would be better tackled through bills related to trade.

    He should also leave the repeal and/or tweak of ObamaCare out of the tax reform legislation. It would seem on the face of it that the two are closely linked. But healthcare insurance remains a divisive issue within the Republican party. To the extent that healthcare can be left to a separate bill that doesn't involve the basic matters of personal or business tax, that would allow the President to get an easier win. His party and the voters will thank him if he does.

    Mr. Trump should relentlessly pursue the easily doable tax reform until the job is done. No president gets everything they want from Congress, but this time getting most of the things on the wish list should be doable.

    It will give the new president the freedom to deal with other things where the wins won't be as easy and the issues are far muddier.

    TOPSHOT - US President Donald Trump speaks to reporters aboard Air Force One on March 15, 2017. / AFP PHOTO / NICHOLAS KAMM (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)