Two months after Donald Trump signed the Tax Cuts and Jobs Act into law, and America is still standing. It’s a remarkable feat considering the left’s apocalyptic predictions that the tax cut would devastate the American economy.
Not only is America standing, but it’s rolling full-steam ahead, a freight train of economic progress that promises to keep chugging along well over the horizon.
More than 300 companies have issued bonuses and/or raises to their employees as a direct result of the Republican tax cut. Many of these, including Wal-Mart, Comcast, and AT&T, are among the largest companies in the country, and thus far more than 3 million Americans have been on the receiving end of the most significant tax legislation in more than three decades.
An equally significant story, however, has gone largely ignored: many of these companies have promised to invest billions in infrastructure and employee training programs, both of which will add fuel to the current economic inferno and increase American competitiveness. (Apple alone has pledged to repatriate nearly $250 billion due to the reduced corporate tax rate.) None of these figures were included in the Congressional Budget Office’s prediction, oft-cited by the Democrats, that the tax cut would add nearly $1.5 trillion to the deficit.
While calculating the total impact of the tax cut so far is an exceedingly difficult task, the legislation has almost certainly resulted in one of the single biggest injections of private funds into the U.S. economy in history, and it’s only just begun.
Which raises the question: has Trump’s tax cut settled the age-old debate of freer markets versus higher taxes?
Judging from the left’s reaction, it certainly threatens to. The tax cut’s early success has afflicted big government cultists with a sort of economic Post-Columbus Syndrome in which the unraveling of one’s belief system leads to dangerous disillusionment.
“These were largely one-time bonuses and meager raises,” rings their chorus, a refrain that conveniently ignores the billions in infrastructure, training, and repatriated dollars also enabled by the tax cut. You know, those things that Democrats have long insisted are necessary to keep America competitive.
In an attempt to set the Guinness World Record for most out-of-touch politician, House Minority Leader Nancy Pelosi went so far as to refer the corporate bonuses as “crumbs,” and Florida Congresswoman Debbie Wasserman-Schultz predicted that they wouldn’t go “very far.”
With its economic back against the wall, however, the left’s anger is predictable. After all, it took a Republican tax cut to increase salaries, something the Democrats have attempted to do for years via campaigns to raise the minimum wage. And by all appearances, investments in infrastructure and training as a result of the Republican tax cut will likewise help America remain competitive, something tax-and-spend liberalism has largely failed to do.
But the real firepower for the free market argument lies in the fact that by all appearances the tax cut will actually increase revenues, a cornerstone of the conservative argument that by cutting taxes the federal government will actually take in more money.
A recent CBO report credits “increases in wages and salaries” as the primary reason for increased tax revenue thus far this fiscal year. While this increase doesn’t account for the new reduced payroll rates, which will initially decrease federal revenue, wages and salaries are likely to continue to grow as a result of the tax cut, eventually exceeding pre-tax cut levels and validating conservatives’ free-market philosophy.
Just last month The Wall Street Journal surveyed economists on the source of America’s recent economic growth and found that “The professional forecasters also predicted 2018 would see solid growth and a continued decline in the jobless rate. One factor: the tax cuts signed into law by Mr. Trump in December, which most economists say will boost the economy for several years at least.”
But perhaps the best defense of the tax cut is simply an examination of the left’s recent economic failures. From a collapsing Venezuela to the blue state exodus to disastrous experiments with raising the minimum wage on the West Coast, liberal economic policies have proven abysmal failures as of late.
Which makes tax cut’s success all the more impressive, and the left’s criticisms of it all the more absurd.
But the left has rarely, if ever, been gracious in defeat.