Welcome to the year of lower taxes. If you have been following the elitist liberal media, you may not be aware of that fact.
News people interviewing news people only produces the echo chamber we see on the networks and cable news outlets. They are obsessed with political machinations and not the substance of the issues. This may be because they are not equipped to discuss substance. Too many of today’s journalists are little more than highly paid gossip mongers. Nowhere is their incompetence more obvious than in the reporting on economic issues.
In what can only be described as class warfare, the Democrats, and too many of their obsequious friends in the press, advance political opinions about the new tax law that reflect either ignorance of economics, ignorance of the legislation or a surrender to shameful political propaganda. I am personally betting on all of the above.
There are at least ten egregious misrepresentations in Democrat talking points that the sycophantic liberal media is too willing to echo.
First: They claim that the new law is a tax increase on middle class Americans. That is simply untrue. Virtually every American will get a reduction in taxes starting in 2018. The Democratic bogus claim is based on baseless speculation that this particular tax cut will end in eight years. Democrats assume that taxes will return to their original levels at that time. It is just as likely, or even more likely that a future Congress would extend or further reduce taxes. Claiming to know the future is simply dishonest. In the meantime, most American taxpayers will get a reduction in their taxes for years to come.
Second: While the Democrats and the press keep saying the tax cuts benefit the rich, that is again factually untrue. Those making less than $400,000 will get a tax cut up to 18 percent. Those over the $400,000 mark will get a maximum reduction of 9 percent – one half of the middle and lower class deduction. The Democrat claim is based on a dishonest conflation of the corporate tax and baseless speculation on future tax levels as explained below.
Third: The media suggest that the termination date is because Republicans are only interested in helping the wealthy – a shopworn canard. They proffer this argument even though they know that the personal tax reduction is time limited because of the arcane rules of the Senate. If the tax had been made permanent, the GOP would have needed a super majority. In that case, the Democrats could filibuster to prevent any tax reform and our economy would continue to limp along with two percent growth and increasing deficits.
Fourth: Democrats say, and the liberal media parrot the claim, that the new corporate tax cuts will not benefit the average American. They predict that the businesses will simply hoard the money, buy back stock or pay dividends to stockholders. Major corporations will do a variety of things with the new money, including investing in capital equipment (more jobs), purchasing other businesses, hiring more employees and raising salaries. Many benefits to employees are already occurring in the marketplace as a string of major corporations have announced bonuses and pay raises as a direct result of the passage of the tax reforms. Even if some do buy back stock, the money that goes to the stockholders is poured back into the economy in the form of investments or purchases. More importantly, the far greater number of medium and small businesses, which do not issue public stock, will grow because of corporate tax cuts — and they produce the vast majority of American jobs.
Fifth: The media reports that increases in stock value or higher dividends only benefits the rich. Joe Scarborough, of Morning Joe, stated that few average Americans own stock – ergo dividends go to the rich. Whether he is ignorant or dishonest cannot be determined, but he is very wrong. Americans across the economic spectrum own most of the stock – if not directly, they own it through their pensions and mutual funds. Just as those retirement funds suffered when the stock market dropped in 2008, the recent surge in the stock market is benefiting millions of average Americans because they are invested in stocks in their IRAs and 401K plans.
Sixth: Among the Democrats more egregious misrepresentations is that increases in corporate taxes stick it to the wealthy. In fact, taxes levied against businesses are ultimately paid by the consumer. They are nothing more than expenses calculated into the final cost of goods and services. They are a hidden tax. Even worse, they are a regressive tax since the price increases hit hardest on the poorest. Businesses do not pay federal income taxes; they simply collect them from customers just as they collect sales taxes. Just because the customer does not see all the corporate taxes on the sales slip does not mean the consumer is not footing the bill.
Seventh: The claim that the new tax law will add up to $1.3 trillion to the deficit over eight years is purely speculative. It is based on static projections that assume no growth beyond the 2.5 percent of recent years. Should tax reform and deregulation produce a growth of 4 percent or above, that trillion-dollar shortfall will be more than erased. Current preliminary deregulation and just the anticipation of corporate tax cuts drove the stock market to record highs and produced a growth rate over 3 percent in recent months – a level that those same economic prognosticators said was impossible less than a year ago. It is more than ironic that the Democrats should talk like deficit hawks when they supported Obama administration policies that increased the burden on our children by $1.3 trillion EVERY YEAR – doubling the National Debt during his eight years in office.
Eighth: Democrats argue that since the economy is finally accelerating, and the unemployment rate is very low, this is the wrong time to stimulate the economy with a tax cut. They fail to consider the lingering low average wage rates. While many are technically employed, the average wage is unacceptably low. Economic growth in sales of goods and services will increase the demand for workers. Since low unemployment reduces the supply of workers, competition will require companies to offer higher wages. It is the inviolable economic rule of supply and demand.
Ninth: Potentially trillions of dollars will be returned to the United States from overseas where they are held in banks (benefiting the economies of those countries) because of our old disadvantageous tax laws passed by liberals to stick it to the corporate America they dislike and distrust – foolishly claiming they were making the rich suffer. This expatriated money will be more rocket fuel for a growing U.S. economy. Like the lowering of corporate taxes, the repatriated money will spur investment, hiring and wage hikes.
Tenth: Democrats proffer the argument that the new state and local tax deduction cap at $10,000 is unfair to high tax states. The cap hits hardest on the wealthiest since they are the ones who would be exceeding the $10,000 cap. In a political turn-about, the Democrats are trying to give more money to those rich folks they despise. They argue that it is only fair to give every American a 100 percent deduction no matter how wealthy they might be – even if that gives the rich guy a bigger break. But wait! Isn’t it fairer to give all Americans the same tax break? Democrats even suggest that the new tax law was politically crafted to punish predominantly blue (Democrat) states. In raising that argument, Democrats are admitting to something Republicans have accused them of for generations. They are the tax-and-spend party. Why should a person in a fiscally responsible state be subsidizing irresponsibility in places like New York, New Jersey, Illinois and California?
In summary, the new tax law is an important first step in dealing with the National Debt in the only way possible – through growth. There is still the essential matter of cutting federal spending. While Democrats never see that as a possibility, there are billions upon billions of dollars that can be eliminated from federal government programs by reductions in waste, corruption and needless expenditures – and that is true of entitlement programs as well. These kinds of cuts should be undebatable, but Democrats will claim that the cut of a single dollar from a single program will wreak havoc on some poor single mom in Chicago who needs the dollar to maintain her place in the bare survival-level welfare trap to which Democrats have condemned her in the first place.
Not being able to stop the passage of the tax reform and relief legislation may turn out to be a major disaster for the Democrats as millions of taxpayers see the reality of the law as opposed to the political lies that permeated the media. I suspect the Democrats probably know that, which may explain why they fought against the law so viciously and dishonestly. It is a pity that the press went along with the misrepresentations.
Larry Horist is a conservative activist with an extensive background in economics, public policy and political issues. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman, and he has served as a consultant to the White House under Presidents Nixon and Reagan. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress and lectured at Harvard University, Northwestern University, Florida Atlantic University, Knox College and Hope College. An award winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He can be reached at firstname.lastname@example.org.