Dec 24, 2017 4 min read

”In 1790, the nation which had fought a revolution against taxation without representation discovered that some of its citizens weren’t much happier about taxation with representation.”

- Lyndon B. Johnson

Lost in the torrent of inane chatter in today’s media is virtually any informed and meaningful discussion of truly significant issues, including President Trump’s tax reform legislation.

The discussion that is available often represents the dishonest framing of issues by the media and the left.

The misinformation, disinformation, distortion and outright inaccuracies are astounding, and all too often go unchallenged. Worse, they are parroted as “fact” by the mainstream media.

The left would have us believe that the Trump tax proposal will cost more than $1 trillion. We are told that the proposals will cause a catastrophe, and that by 2027 we will see fiscal Armageddon. The proposals will somehow impart untold new wealth to the wealthy, while pushing widows and orphans into the street. Thirteen million people will lose health care coverage, and that the only winners will be large corporations.

Much of the criticism concerns events that may or may not occur. Looking into the economic future is difficult, and it is extremely difficult when one makes no allowance for change. Start with the idea that cutting taxes will be “costly.” Democrats believe that all taxpayer money somehow belongs to the government, and the failure to collect the maximum amount is a cost.

Under this view of taxation, the government determines how much of an individual’s assets they should be allowed to keep after it determines the proper economic priorities. Trump and conservative Republicans believe that the people own their assets. The people determine how much to allocate to the government, and it is to be used for purposes determined as proper by the people.

The second great flaw in the arguments against the tax bill is that decreasing tax rates decreases total government revenue.

Three examples exist in recent history where tax rates were cut significantly, and government revenue increased.

The first was in 1961 to 1963 during the Kennedy administration. Tax rates decreased, and government revenue rose 5 percent per year. The second occurred between 1982 and 1988 during the presidency of Ronald Reagan. Government revenue increased 50 percent between 1983 and 1988. The third was in 2002 and 2007. President George W. Bush and a Republican Congress cut tax rates in 2002, and government revenues increased 39 percent over five years.

Clearly, deficits are caused by profligate spending and not tax cuts. Major spending programs are rarely temporary, and once a budget is increased, it seldom is decreased.

Then we move on to another argument favored by the left, that the tax bill cuts taxes for millionaires while raising taxes for the middle class. This is simply not so, and is a class-warfare tactic being deployed by Democrats. According to the nonpartisan Joint Committee on Taxation, middle-income Americans making between $40,000 and $70,000 per year would see rate reductions of 7.1 percent. People with incomes between $20,000 and $30,000 per year would see reductions of 10.4 percent. Millionaires, on the other hand, will typically see rate reductions of 5.3 percent.

Most married couples with children earning less than $60,000 a year will probably have no tax liability, because the child tax credit is being increased to $2,000 per child.

One of the reasons critics cite as a reason taxes will increase for middle-class taxpayers is that many of the tax cuts are set to expire in 2025. That is unlikely, because if Republicans control either House in 2025, the reduced rates will likely be extended. With Democrats in control, bet on taxes going up.

Millions of people will not lose their health insurance because of the tax bill. The tax bill eliminates the Obamacare mandate to buy health insurance. For whatever reasons, many people who do not desire the mandated insurance will voluntarily drop it. The tax bill does not exclude anybody, nor does it eliminate subsidies.

Neither will anyone lose Social Security or Medicare benefits. Nothing in the bill impacts entitlements or the social safety net.

Those who claim this are erroneously assuming that when the government cuts tax rates, it will spend less. That is not true.

Finally, the bill provides a special “529 account” to pay for elementary and secondary education, and keeps the interest deduction for student loans.

The mere expectation of President Trump’s tax reform bill has had a very positive impact on the economy. As an example, a recent report notes that year-end bonuses for average workers are up indicating that the increased wealth is being shared throughout the economy. Trump is producing results.

Going back to Johnson’s quote, obviously many people do not like taxation. Fine. Got it. Before joining the debate, let’s at least try to understand the subject matter.