Most of the media coverage, like this from CNBC, follows the current dopey trend of obsessing over how quickly the proposal will be done. Wednesday? Thursday? The following week? Maybe this is all about the spine-tingling drama of whether it will happen within Trump's first 100 days, since all of America waits with bated breath for the answer to that question. Er, yeah . . .
But when it happens is not the point at all. It's what the plan consists of, and while Trump isn't dropping many details, he's certainly not being shy about establishing expectations:
President Donald Trump says businesses and individuals will receive a "massive tax cut" under a tax reform package, though the timing of that package was unclear.
After initially saying the package would come next week, the White House issued a subsequent statement to CNBC that appeared to soften that timeline: "The President was saying what we've been saying all along, that he wants to do tax reform as quickly as possible while still doing it right."
Then, Trump himself said at the Treasury Department that the reform announcement would come on Wednesday.
"We'll be having a big announcement on Wednesday having to do with tax reform. The process has begun long ago but it really formally begins on Wednesday," Trump said.
Earlier, in an interview with The Associated Press, Trump says the plan will result in tax cuts for both individuals and businesses. He would not provide details of the plan, saying only that the tax cuts will be "bigger I believe than any tax cut ever."
Reducing the 35 percent corporate tax would also be a welcome development with a major impact
Now you know Trump, and you know the media. Bigger than any tax cut ever in Trumpspeak might just mean really, really big. If it doesn't turn out to be the literal biggest ever, we'll be treated to weeks of media "fact-checkers" claiming his pants are on fire or whatever.
Far more important, of course, is the actual form of the change that's proposed. I would expect a very likely change would be the severe reduction or total elimination of the tax on repatriated profits. This is the tax that sees the federal government sock it to corporations to earn money overseas and bring that money back into the U.S. Because corporations don't want to pay the tax, they tend to leave those earnings overseas, and the U.S. economy is denied access to the capital. Eliminating the tax could cause hundreds of billions to be brought home, and it could provide a gigantic shot in the arm to the economy.
Trump has signaled in the past that he wants to get rid of this tax, and there's every reason to think he will propose to do so here.
Reducing the 35 percent corporate tax would also be a welcome development with a major impact. The left points out that most corporations don't really pay 35 percent because there are so many loopholes, but that is not an argument for keeping things as they are. Those corporations should be spending their time making and selling products, not strategizing over tax loopholes. Reducing the tax rate and getting rid of the loopholes would allow corporations to refocus on running their business rather than tax avoidance strategies.
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After eight years of Obama's giving us growth of less than 2.0 percent a year, we badly need sustained, faster growth
As far as individuals are concerned, the best proposal would be fewer brackets (or preferably one one) and much lower rates for all that remain. I think Trump probably believes a flat tax would be good policy, but he might see it as a bridge too far politically such that he'd rather make some incremental progress in the direction of a simpler tax code with much lower marginal rates. And yes, that would be better. It wouldn't be the best thing possible (I'm still kind of partial to the boss's 9-9-9 plan myself) but lower rates and simpler structures also spur activity and growth.
Thus far Trump hasn't made any significant moves with the goal of spurring growth. We're only three months into his presidency, of course, and I'm the one who keeps telling you it's better to do it right than to do it fast. But if the tax proposal is anything like Trump is making it sound, it should be the first major effort to accelerate growth. After eight years of Obama's giving us growth of less than 2.0 percent a year, we badly need sustained, faster growth. Let's hope this proposal shows that Trump has made growth a priority, and that he understands how to make it happen.
