We Told You So!
The 2017 Tax Reform Delivered as Promised is the title of an article that appeared in the May 8, 2022 Wall Street Journal. Written by two distinguished economists, this article explains how they predicted the favorable economic effects of the 2017 Tax Cuts and Jobs Act and how critics attacked them for being overly “optimistic.”
Here are some of the points made in the article:
- In 2017, we predicted that reducing the federal corporate tax rate from 35% to 21% and introducing full expensing of new equipment investment would boost productivity-enhancing business investment by 9%. Though growth in business investment had been slowing in the years leading up to 2017, after tax reform it surged. By the end of 2019 it was 9.4% above its pre-2017 trend, exactly in line with the prediction of our models.
- Among S&P 500 companies, total capital expenditures in the two years after tax reform were 20% higher than in the two years prior, when capital expenditures actually declined.
- We also predicted that by enhancing worker bargaining power and increasing new investment in domestic plant and equipment, the average household would see real income gains of $4,000 over three to five years. In 2018 and 2019 real median household income in the U.S. rose by $5,000—a bigger increase in only two years than in the entire eight years of the preceding recovery combined. In 2019 alone, real median household income rose by $4,400, more than in the eight years from 2010 through 2017 combined.
- In the 2021 fiscal year, not only did federal corporate tax revenues come in at a record high, but corporate tax revenue as a share of the U.S. economy rose to its highest level since 2015. Actual corporate tax revenue in 2021 was $46 billion higher than the Congressional Budget Office’s post-reform forecast.
If You Want A Real Increase—Pass The FAIRtax Now!
The economic gains discussed in the article are great, but these gains are very small compared to the economic gains that the FAIRtax will produce. Under the FAIRtax:
- The corporate tax rate will be not 21% but 0%.
- Businesses and individuals will not have to worry that every new Congress will change the rules and increase tax rates—as the Biden administration attempted to do.
- Wholesale prices for raw materials and manufactured goods drop dramatically as those prices will no longer contain the embedded tax costs of the federal income/payroll tax system.
- American-made goods can finally compete with foreign goods that come to the world market without any tax costs embedded in their prices.
- Production will dramatically increase, thus reducing the rate of inflation which is being driven by too many dollars chasing too few products.
- Increased production will lead to even higher wages needed to attract and keep employees—as we are seeing now.
- Imported products will no longer receive a 15% or greater subsidy thanks to the current income/payroll tax structure as they compete with U.S. products.
- U.S. exports will become much more competitive without the 10%-20% increase in prices caused by the income/payroll tax system.
ConclusionThe young man wagging his finger in the picture is actually my seven-year-old grandson. Like everyone else’s grandson, he is very smart besides being very cute.
There are two reasons why this picture is important. The first is that our grandchildren have no problem understanding that any system that prevents Americans from being as prosperous as they could be is just wrong.
Does he understand all of the economic arguments? No, but he really doesn’t need to understand them. All he needs to understand is that enacting the FAIRtax and eliminating the income/payroll tax system will improve the lives of his family and all of his friends by simply changing the ludicrous way the federal government taxes its citizens—that is easy for him and for anyone else who doesn’t have a vested interest in the present system to understand.
No one can really argue that enacting the FAIRtax will do more to stimulate U.S. economic growth than any number of “reforms” to the present income/payroll tax system could possibly do.
Under the FAIRtax, U.S. companies:
- Will have large financial incentives to purchase U.S.-sourced raw materials.
- Will have large financial incentives to purchase equipment made in the U.S.
- Will have large financial incentives to do their research and development with U.S. companies and institutions.
- Will be much more competitive both in the U.S. and abroad.
- Eliminate all tax returns, both personal and corporate
- Eliminate Federal withholding from our paychecks.
- Eliminate government bureaucrats’ ability to dictate how much tax we owe and put us back in control of when we pay our taxes and how much we pay.
- Eliminate public leaks of our private and personal information by bureaucrats.
- Eliminate the billions of dollars now paid to tax lobbyists.
- Eliminate the billions of dollars paid to the income/payroll tax industry. This is an industry that creates no products but only helps those who can afford it to navigate the insanely complex and totally unnecessary income/payroll tax system.
- Eliminate Congress’ ability to hide social programs, like the earned income tax credit or child tax credits, in the income tax code and force them to pass legislation separately.
- Eliminate the Ruling Elite’s ability to directly control us by threatening us with adverse tax code changes if we dare oppose them.
This we know is not the case.
THE SECOND REASON IS ACTUALLY MORE IMPORTANT. This is a reminder of the real reason why all of us are still working to replace the income/payroll tax. It is for all of our children and grandchildren and their children. We want them to have the opportunity to live in a prosperous country where they are limited only by their own ability.
That is why we must continue—not just for us even though it will help us, but for the future generations.
The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
ALL AMERICANS MUST JOIN US BEFORE IT IS TOO LATE AND THE WONDERFUL COUNTRY WE LOVE IS FURTHER HARMED.
Join us and TAKE BACK CONTROL OF OUR COUNTRY—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
What Can Each Of Us Do?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases.
WE and not the Ruling Class and their minions in D.C. will decide how much federal tax we pay!
WE will know how much tax we and everyone else are really paying because taxes will no longer be hidden from us. It will be clearly shown on every retail receipt.
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
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