The singular policy accomplishment of the Trump administration has been fundamental tax reform—the kind of fundamental, structural tax reform that hasn’t happened since Ronald Reagan.
And because tax policy strongly influences both investment and business confidence, tax reform has clearly boosted the economy. Personal income has been rising, unemployment has plummeted to historic lows and labor force participation has risen. Business investment increased and inflation is under control—overall, a far better economy than the one Trump inherited.
Meanwhile, Democratic presidential challengers, embracing Walter Mondale’s losing 1984 approach, are falling all over themselves proposing tax increases to fund their gigantic new spending proposals and to reverse changes they believe disproportionately helped the wealthy.
With all of Trump’s vulnerabilities of style and substance, Democratic candidates who promised mainstream policies accompanied by much less drama might appeal to voters. But that’s not what Democrats are doing.
Indeed, it’s a progressive bidding war of new spending—with higher tax revenue from the wealthy portrayed as a limitless resource.
Bernie Sanders has proposed increasing the estate tax to 77 percent, and he plans to pay for his proposal to forgive all college debt and provide free college tuition to public universities with a tax on financial services transactions.
Elizabeth Warren is also pushing a wealth tax, along with repealing most of the Trump tax cut. Kamala Harris wants to repeal the tax cut and attach a large tax on financial institutions, and use the tax code to give cash payments to low- and middle-income families, again paid for through higher taxes on the wealthy.
Cory Booker wants to increase the capital gains and estate taxes. Kirsten Gillibrand and Tulsi Gabbard want to reverse the Trump tax cuts, and Julian Castro wants to raise the corporate rate to ensure that corporations “pay their fair share.”
The leading Democratic candidates have all embraced the progressive class warfare rhetoric: The only reason you have it tough is because of the greedy rich on Wall Street and corporate America. So let’s take from them and give to you.
However, there’s a basic math problem—you can’t raise enough money to pay for these grand schemes by taxing the wealthy. In fact, according to most estimates, if we confiscated the ENTIRE WEALTH of all U.S. billionaires, it could only fund the current functions of the federal government for eight or nine months. And that’s before all of the pie-in-the-sky expanded spending the Democrat candidates are promising. We’re still a middle-class country.
The only way to raise substantial revenue is to go after the middle class—which is why tax increases aimed at “the rich” always end up hitting the upper end of the middle-class.
The Democratic candidates all claim their new programs and tax increases would boost the economy. Ironically, their chief goal is to repeal Trump’s one accomplishment, tax reform, that actually has improved the economy.
June 26, 2019