The looming question for the next decade is will Trump’s tax reform legislation make our economy better or worse?
The tax package gives individual taxpayers “temporary” relief during 2018-2025 while the corporate tax rate is “permanently” lowered by 40 percent from the uncompetitive 35 percent to a constructive 21 percent.
Although the law added $1.5 trillion to our bloated $20.5 trillion federal deficit ($62,805 debt/person), Congress promised the cost will be made up by economic growth during the next decade. Adding $1.5 trillion to the unrestrained federal debt and hoping economic growth will occur was not wise.
The nonpartisan Committee for a Responsible Federal Budget calculates the $1.5 trillion tax cost means the national debt will be larger than our economy in just ten years. Without budget cuts, the federal deficit will grow $10 trillion in the next decade.
When you hear the White House and Republican-controlled Congress propose to cut back Social Security, Medicare and Medicaid funding, you’ll know why — the new tax reform package is costing us dearly and something has got to go.
Several issues are currently going against long-term economic growth: 1) America’s trade deficit has dramatically risen to $50.5 billion, the largest imbalance in nine years, 2) borrowing interest rates for consumers and businesses are increasing, 3) credit-card debt has hit a record high $1.021 trillion, 4) consumer savings rate is at a 12-year low, 5) higher inflation is being observed, 6) company valuations and venture capital investments are dropping and 7) manufacturing productivity is declining.
We have other economic growth warning signs: 1) U.S. Treasury’s borrowing has hit an eight year high, 2) new company creations are in dramatic decline, 3) only 14 percent of CEOs surveyed by Yale University said their companies plan to make immediate capital investments and 4) Trump’s explicit condemnation statements about our trading allies, dropping our 12 nation Trans Pacific Partnership trade commitment and possibly pulling out of the NAFT has caused a multitude of economists to predict we will enter some form of recession during the next few years.
According to the conservative Wall Street Journal-NBC News survey, only 24 percent of Americans feel positive about the child tax credit increase, doubling the standard deduction and lowered corporate tax rate. What is of paramount importance is not polling numbers but payoff down the road.
We can only dream wise decision-making will be forthcoming from Trump, Congress, our 46th and 47th presidents and future congressional delegates. Our only real hope rests with the business community.
According to Peggy Noonan, conservative columnist for The Wall Street Journal, “the tax bill gives corporate America more than a boatload of money, it offers a historic opportunity — a timely and perhaps final one.”
Noonan contends corporations have two choices. They can become self-serving by taking the tax cut gift, hire a few more employees for PR sake, buy back stock to make the wealthy stockholders wealthier and increase shareholder profits. Or, businesses can expand their technology prowess, data analytics and employee base, upgrade equipment, become marketing gurus and “repay America” the $1.5 trillion cost of the current tax bill.
As a pro-business centrist, I know America’s 27 million small business and 18,586 large-scale company owners concur with me we need to step up to the plate and demand Trump abandon his reckless populist-authoritarian-nationalism stance so businesses will once again have an opportunity to trade globally, dignify capitalism and save America’s economy or play the public relations game and watch Trump’s tax law become the worst legislation and economic recovery debacle in the history of the world.