But hey, let's not be biased. Let's read
City Journal's take on the tax bill. Just to be sure.
Okay, so the tax bill's going to pay for itself by increasing growth through work and investment, which will compensate for the loss in revenue. In other words, a roundabout way of justifying the tax cut via the Laffer Curve. Economically sound reasoning on principle. But that raises the question of whether the facts of America's economic condition supports using the Laffer Curve in this way.
We can look at the opinions of economists. Economists
overwhelmingly disagree that the tax cuts will increase revenue. At least with individual income, there is consensus that tax cuts will not increase revenue.
But what about business tax? Well, that's complicated. The United States does have the highest ~nominal~ business taxes, and there's ~some~ evidence that cutting the business tax rate might increase revenue. But the
effective tax rate of American businesses is extremely low, already far below the OECD average that's supposed to be the Laffer curve "sweet spot" Republicans are aiming for, justified by papers such as
this.
In other words, they're equivocating on the effective and nominal U.S. tax rates. However, it's not entirely bad, the tax plan also does limit some corporate tax credits. However, it repeals the minimum and many tax credits are left in place; it's hard to estimate exactly how this will effect the actual coporate tax rate, but the point is, it's
probably to the left of the maximum in the Laffer curve, i.e. won't produce revenue.
A common refrain, but this raises the question: do the wealthy disproportionately benefit from government spending? If they do, it's wrong to claim the current progressive tax system is "unfair" in any way. And I think it's pretty uncontroversial that they do disproportionately benefit from government spending: the bailout, for one, preserved the value of many toxic financial assets that wealthy people had a larger stake in, while homeowners were often shafted.
Again, true, but the U.S. also has by far the worst inequality in the developed world. So much that they still earn more than the wealthy in other developed nations, even after the heftier progressive tax.
That's because the benefits to the wealthy are not primarily in income tax, they're in the value added to corporate stock, which
wealthy people own almost all of.
Sounds alot like the Bush tax cuts.
When you comprehend the whole paragraph and look at the key idea, what it's saying is cutting taxes is good because it helps businesses, while spending is the problem. Also, "lol" that the pretext for this normative claim is "reality".
As above, equivocating on the nominal vs. the effective tax rate.
"Flexibility to repatriate capital" means literally not taxing income they bring back. More on why this is meaningless later.
You've created an incentive, but is it an effective one? More on why this is meaningless later as above.
Yes, if you could get corporations to invest. But this is unlikely, and as above we will discuss why this is later.
"It will grow" is not the same as "it will grow significantly and justify its costs". I'm not sure how these estimates are done, but I'm also not sure how strong the "consensus" is here: they certainly preferred to label the highest estimated GDP increases they could find, but didn't seem to present the alternative view.. hmm.
How about both? There's evidence that redistribution
does not create market-destroying conditions. Much the opposite, in fact, it doesn't seem to correlate at all with growth, or if it does, the correlation is that inequality produces slightly less growth. This is good news for progressives: increase the effective top tax rate to 60% and you won't see any loss to productivity. In other words, it literally doesn't matter to the economy how much CEOs earn. Half or quarter their income and nothing will happen except conditions will be better for other people.
Sure: Democrats often propose policies that might hamper growth, but that's not the point here.
Let's look at their source:
It's not even remotely funny the level of cynicism one must be capable of to say with a straight face that this loss of employment is bad. "The ACA is bad", the Republican said, "because healthy people don't want to do slave labor."
Buzzwords
So on what I was going to comment on earlier: there's every reason to believe that the tax bill will have only tiny effects on investment. Consider, for one,
this event. Seriously,
watch the video.
CEOs couldn't even bull****. They are under no false pretenses and are not lying. Most have no intentions of expanding their businesses after the tax cut, despite that being the
necessary ingredient for the tax cuts to be able to pay for themselves on any level. Corporations are
awash with cash. They are sitting on record amounts of money. Letting them bring back hundreds of billions for free and cutting their taxes isn't going to change what they're already doing, in fact, most predict they're going to
double down on share buybacks and other activities which help only the 84% of their primary shareholders.
Not to mention the opinion of every rating agency ever that this will not lead to substantial growth.
So, cherrypick the outlier estimates if you want even minimal GDP growth, sure. Over here in "let's pick the mean if you want a better approximation" land, the Republican tax bill is bunk, and I can safely say the conservative defense of it is economically illiterate, biased, uninformed, and relies on brushed-up faulty economics 101 reasoning that any serious person can see through.