On Wednesday, September 6, President Donald Trump presented a speech in Bismarck, North Dakota on his plans for tax reform policy. President Trump touted across the board tax cuts for middle class families and businesses alike. He also stated his wish to reform the burdensome code that is in place today to something more simple and easy to understand for the average American.
The full transcript of his speech can be found here.
The following statements from budget and tax experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Media Specialist Billy Aouste at [email protected] and 312/377-4000 or (cell) 847/445-7554.
“President Trump’s proposal for major tax cuts can be a major positive for the economy. The main unknown is Congress. If Congress insists on a revenue-neutral tax bill, as in 1986, it will fail to ignite growth. Since the 1920s, successful tax cuts have had two important features. First, they cut tax rates for all taxpayers, regardless of income. Second, successful tax cuts initially reduced revenue to the federal government. If Congress provides sufficient incentives for taxpayers, while containing the growth in federal spending, the economy will soar.”
Policy Advisor, Budget and Tax Policy
The Heartland Institute
“The term ‘tax reform’ is an oxymoron. There will be no real tax reform when Democrats and their Republican enablers get together to undermine the Trump proposal. As a result, complexity of the tax code as measured by the number of pages in the tax code, along with its interpretation, will very likely grow beyond the current 70,000-plus pages. Can tax rates be cut? Maybe on the corporate side, but probably not much for the personal side. And we will still have the taxes attached to Obamacare, which push capital gains beyond 23 percent, a ludicrous rate that impedes economic growth. The capital gains tax should be in the five to 10 percent range to foster maximum economic growth.
“How to do real tax reform? First, repeal the current code in its entirety. Replace with a flat tax in the 15 percent range. Such a code could be written in a couple of hundred pages. When tax proposals were evaluated by objective and qualified judges during the presidential campaign the Ben Carson pure flat tax (no deductions) won hands down on economic growth (around 3 percent) and with no growth in debt. Regulation must be rolled back on a major scale, since regulation is simply another form of taxation. The rollback can be carried out without any loss in positive externalities since regulation in most critical areas far exceeds the justified amount.
“If all this is handled as suggested, economic growth could approach five percent. However, do not expect this to come to pass in the current situation. The Swamp is very powerful. Only an agenda-driven originalist Supreme Court can rein in the Swamp on taxes. My suggestion is for the Supreme Court to box Congress in by finding that progressive taxes are unconstitutional – a takings under the Fifth Amendment.”
Policy Advisor, The Heartland Institute
“Donald Trump got his groove back. According to the Simpson-Bowles Commission, tax reform was to raise $800 billion in budget savings over seven years. Lowering rates and expanding the tax base – in a way that was both revenue-neutral and incidence-neutral (each income class left unaffected) – was to save billions of dollars in compliance and the cost of enforcement. The projected budget savings neither factored in long-run impacts of increased labor supply and reduced reliance on our income security programs, nor private-sector savings in the cost of compliance. Tax reform was the one part of the commission’s set of proposals that were supposed to be a ‘no-brainer.’ But, nothing in Washington, D.C., is a no-brainer, since partisan jockeying and personal vendettas distort the ability of seemingly rationale people to focus on serving the people of the country.
“But now, with Donald Trump’s leadership in response to the natural disaster of Hurricane Harvey, in affecting a quick and dirty agreement on the debt ceiling, and in signaling a willingness to work with Congress on DACA and on immigration reform in general, suddenly the prospects for tax reform are positive.
“Among the specifics of tax reform are: tax simplification; dove-tailing our tax system with our income security system (to include subsidies for health insurance); eliminating double-taxation; refocusing taxation from global to national income (underlying the corporate inversion problem); shifting taxation from income to consumption; and fairness in border taxation between the U.S. and our trading partners. This is a huge agenda, and there may be no good way to piecemeal tax reform. We may have no alternative but to cut through this Gordian Knot.
“But, if Senator John McCain can come around on health care reform, who knows, maybe President Trump can get something meaningful done on tax reform.”
Eldon R. Lindsey Chair of Free Enterprise
Professor of Economics and Finance