Donald Trump, who this blog has consistently criticized, is right on one point. Recently, he proposed a simplified flat tax code. It would cut the number of brackets and generally reduce most peoples’ taxes as well as the corporate tax rate.
The goal of such a system is to encourage, not discourage, work, whether you’re rich or poor or have a big or small business. Make more. Keep more. That sums up this common-sense philosophy.
The goal of a simple tax code that doesn’t try to redistribute income is to allow the citizen to take home more of what he or she earns.
“A wise and frugal government,” said Thomas Jefferson in his first inaugural address, “shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”
However, I doubt that Trump has ever studied Jefferson or the history of tax cuts.
A flat tax code at a lower rate than today—a tax code that would replace the present complicated system and would reward work, savings and investment—would be best for our economy. Naturally, Trump’s opponent Hillary Clinton– whose main economic idea is that taxing the rich will solve all our problems since they will pay for all the rest of us—immediately dismissed the Trump plan as ‘trickle down” economics.
This is a criticism that basically tells us that a big tax cut policy is always bad because only the rich win. This is the politics of class warfare, which Hillary Clinton loves. The problem with it is that it is often great politics, but lousy economics.
This we can’t have lower taxes idea also ignores the macro, big picture, effect of finding a way to make the economy grow faster. This is something Clinton will likely dismiss. That’s because she served in the Obama administration, which has presided over an economy with, at best, a poor economic record. Yes, the economy has recovered under the Obama/Clinton administration. But it has been the weakest economic recovery in the United States since 1949.
Less Is Better
What is the case for a flat tax or a simpler, clearer, lower tax rate system?
It takes less out of our pockets. It makes it easier to understand what we must render unto Caesar. It makes it easier for private businesses, the engines of real job growth, to do long term planning, not only because rates are lower but it is easier to understand. It would also give the United States economy the chance to perform much better than the puny one to two percent or so annual growth rates of the past few years. This is a sorry record that has left millions of Americans unemployed and uncounted (They stop looking for jobs, which explains why the unemployment rate has declined. The key indice is labor participation rates, which have been the lowest in years).
These growth rates have come in an administration that Trump’s opponent, Hillary Clinton, served. She seems to want everyone to forget its record, whether one is discussing growth rates or fatal attacks on U.S. diplomats in Libya.
The Donald Is Not the Answer
So why criticize Trump since he seems to be on the right side of history?
Unfortunately, the person today advocating this sound flat tax idea is a man with the attention span of a flea; Trump is someone who likely hasn’t read five books in his lifetime and that includes coloring books.
So one must always be wary of this strange leader. Yet Trump is obviously not the person to rollback a warfare/welfare state that is out of control. He gained many of his business advantages by his political connections and special tax breaks in New York. He has also failed with many of his ventures.
The problem with Trump is that, even when he has a good idea, one wonders how committed he is to it or any idea. Does he really want tax reduction, an idea that can revive a nation? Is he a real tax cutter, one of a group of enlightened leaders in history who understood that less is more when governments enact tax policy?
A German Friend of Freedom
One thinks, for instance, of the great German finance minister Ludwig Erhard, whose numerous rounds of big tax cuts helped resurrect a defeated nation after World War II. Erhard, who was a thinker and a man of mental substance (Also physical substance. He was a jolly fellow who liked lots of bier. He helped create the German economic miracle in the 1950s.
By the way, at the same time, Britain tried tax cuts, but they were very small and designed not to offend anyone who thought they would help the rich too much. The result? Britain’s economy grew at a much slower rate than Germany’s.
But does Trump understand any of this? Does he have any of the intellectual capital of an Erhard? That is tantamount to comparing French cuisine to what one gets at McDonalds. Does he understand how cuts have worked effectively?
Lo dudo, senor!
For instance, republican administrations in the 1920s and 1980s, the Harding-Coolidge and Reagan administrations, cut taxes and the economy boomed. Aha, Clinton and her associates will say, that was under republican administrations that only cared about the rich!
Will Trump have the intellectual curiosity to understand the successes of a Democratic administration, the Kennedy-Johnson presidency of the early 1960s, that also cut taxes and understand why lower taxes worked?
The economy boomed. President Kennedy, in advocating for the cuts and ignoring the class warfare arguments that Clinton will undoubtedly use against Trump, famously said that “a rising tide lifts all boats.” It did. The U.S. had strong economic growth after the cuts were enacted.
By the way, Hillary Clinton’s husband Bill Clinton, cut capital gains taxes in the late 1990s. And what happened? There were many more capital gains in his second administration. And that helped the economy.
Will Trump have the intelligence and the patience to point this out? And is Trump, recent comments aside, even really committed to cutting taxes or is this just something that struck his fancy and in a few days, or maybe minutes, he’ll be on to something else?
To me, it seems the latter is most likely. I’m not sure that Trump is committed to anything save a campaign of invective and looking at this race the way he would look at promoting the next wrestling match. I do not think that Trump believes in anything save himself.
In that he reminds me of his opponent. Hillary Clinton believes in herself and little else. The Clintons lust for power. And she wants the job not because she has any principles, which she can change or erase like an email server. She didn’t object in the late 1990s when her husband said that “the era of big government is over.”
“Ate, Come Straight from Hell…”
But now, with the presidency within sight, ahead in the polls, she is ready to adopt a socialist agenda of Bernie Sanders’ supporters. But many of them can’t stand her. That’s because they understand that she is about as trustworthy as Ate, the Greek goddess of discord.
Marc Anthony, sorrowfully standing over the grave of his friend Julius Caesar in the great play of the same name by the Bard of Avon, promised to unleash Ate, on Caesar’s murderers. Ate, who Anthony said would come “straight from hell,” was the Greek goddess of discord and mischief.
Hillary and the Donald, who deserve each other, are a pair of Ates.
If only—Ojala, senores—-both could lose!