If you watch one video today, watch my interview on Capital Tonight discussing the benefits of the pro-growth Tax Cut and Jobs Act passed today by Congress and signed by President Trump at time 3:30 here.
Here’s the Texas Public Policy Foundation’s press release on it today with my statement.
My thoughts: Although it’s not perfect, upon final passage today by the House and eventual signature by President Trump, this first major tax reform in a generation (1986 was last time) is a historic moment for our republic.
The permanent cut of the corporate tax rate to below the worldwide average, immediate expensing of capital purchases for five years, lowering tax liability for business pass-through income, and permanent elimination of the corporate alternative minimum tax are huge for reducing the cost of doing business. The individual income tax cuts will likely be felt by the vast majority of taxpayers. The $10,000 limit on the state and local tax deduction will put pressure on state and local politicians from excessively spending and taxing hard-working people. The inclusion of 529 savings plans in the tax bill to allow $10,000 to be used for schooling will empower parents so more children can have their unique needs met. The repeal of Obamacare’s individual mandate is a tax cut for people that had been forced to purchase insurance, but the regulations and likely continued increases in premiums from fewer non-healthcare users require full repeal of this absurd law.
According to the principle of good taxation (simple, flat, broad), this tax bill achieves simplification and broadening the base, but flattening the brackets didn’t happen as there remains seven income tax brackets with the highest rate dropping from 39.6% to 37% and the lowest remaining at 10%.
Overall, this is a pro-growth, prosperity-generating tax bill that help many people have a brighter future by reducing government barriers to their ability to flourish.
But there’s more work to do! We must push for spending restraint and cuts, which is the way we truly reduce the excessive burden of government instead of just the tax burden.
The Texas model has provided the path to policy, let’s make sure that continues here and continues to infiltrate the big government planners in D.C. as we have seen in regulatory reform and now what is historic tax reform.
Ph.D. Economist at the Texas Public Policy Foundation. Blog posts are publications by the author.