Many are criticizing the Trump tax cuts. Whether or not you care for his presidency, will the net effect of lowering taxes be good or bad for the economy?
Depends on how you measure the economy. Middle class tax cuts will expire. Corporate tax cuts won’t. If you measure the economy in GDP, we’ll probably see some inflation down the road, but that’s as bad as it gets. The infrastructure which Congress is not allocating resources to fix will keep getting worse, and income inequality will probably continue to increase.20% of the people in this country hold 90% of the wealth. 1% holds 37%. [1]That will only get worse.Now, I see two primary arguments in favor of tax cuts, particularly on the wealthy.This will induce the wealthy to invest and create more jobs. This is incredible bullshit. Apple was sitting on hundreds of billions of dollars in the U.S. already. Why weren’t they spending that money, creating jobs? Oh, that’s right, they were already producing all the product there was a demand for in China. If you gave Donald Trump another billion dollars, what we he have done with it? Bought some more gold toilets? When you’ve already got stupid amounts of money, a couple of percent more or less on taxes is not going to make a bit of figging difference on how you spend it.“I earned it, so I should keep it.” Tell you what, if that money is all salary, I think you’ve got a point. Tell you what, we’ll only tax at 75% all your non-salary income, stuff like rents, capital gains, interest income. And we’ll start to levy land-value taxes. My point being that there is a lot of unearned income, getting money by having money, and that goes overwhelmingly to the already wealthy. The game, as it is now, is rigged.I don’t really have a problem with cutting taxes on corporations. As long as their shareholders are paying appropriately. But if you really want to stimulate the economy, tax cuts should go to people that will actually spend that money and create demand. Cut taxes on the bottom 60%, and raise it on the top 20%. That will actually boost economic activity, and reduce wealth inequality.Footnotes[1] Wealth, Income, and Power