Trump Tax Cuts Will Not Add $1.5 Trillion To National Debt

I don't want to delve too deep into this subject. But, I'd like to make a few notes about the Donald Trump Tax Cuts. I just want to say that it offers everything nearly every conservative champions for. And they are revenue neutral. All this talk about it costing trillions of dollars is poppycock. 

Look at it this way. The CBO estimates the cost of nearly all prospective bills. Their job is to estimate how much it will cost. Please note that they make their predictions based on how the economy is rolling right now. Okay?

They assume things will not change. So, based on how the economy is right at this moment, they estimate the bill will add $1.5 trillion to the national dept.

This is all a bunch of poppycock. Before every tax cut, liberals say it will add to the national debt. They worry how much it will cost. They never worried about how much their spending programs will cost. They never worried about how much Obamacare would cost. But, when it comes to tax cuts, they nearly always say it will cost too much. It will add too much to the deficit.

But it won't. They never do. Tax cuts never result in loss of revenue as liberals say they will. In fact, as we reported on on this blog here, tax cuts increase government revenue. They do this because there is always an unexpected economic boom that follows them. It's always unexpected, at least according to the liberal press. It's always unexpected.

But, after every single tax cut in our history, there has been an economic boom to follow. It happened after the Harding/Coolidge tax cuts, it happened after the Kennedy tax cuts, it happened after the Reagan tax cuts, and it happened after the Bush W. tax cuts.

And because of this boom, revenue coming in increased each time over the ensuing ten years. Ten years after the Kennedy tax cuts government revenue nearly doubled.

So, all this bologna about increasing debt is just that: bologna. It's poppycock. It's a bunch of liberal crap to spin the tax cut in a negative way. It's an effort to dampen public opinion of it. That's all. It is simply not true.

I don't think I need to explain why it happens again in this post. I have covered that in many other posts on this blog. But, I will say here that tax cuts increase wealth, it increases government revenue. It does not increase debt. It does not cost money. It is revenue neutral.

Tax Cuts Increase Government Revenue

A typical myth used as a scare tactic.
This one was created to dissuade voters
from supporting the Bush tax cuts
in 2001. Which, by the way,
increased government revenue.

There are so many myths out there it isn’t even funny. A common one revolves around tax cuts. Every time Republicans propose tax cuts, you have democrats chiming: “How are we going to pay for it? We can’t afford tax cuts.”

Why not. For one thing, why can’t the government do with less? The entire premise of a tax cut is that the government can go with less. If you have less money, then you cut waste. Where is there waste in government? There’s lots of waste in government. Cut the frickin waste. If a job isn’t needed, cut it. If a department isn’t needed. Cut it.

Reagan cut taxes. Reagan also increased spending on national defense to win the cold war. God forbid. The tax cut inspired an economic boom. By the end of the 1980s, the national debt was sky high. Democrats blamed the Reagan tax cuts. They failed to blame their reneging on their promise to cut spending.

Still, even without spending cuts, tax cuts pay for themselves. With more money in their pockets, people have more money to spend. This boosts the economy. Able to keep more money, businesses, and industries have more money to play with. They can hire more workers. They can open new plants and hire even more workers. They can offer higher wages to keep their best workers. They can offer higher wages to draw in the best workers.

This creates more jobs. The end result is more taxpayers. More taxpayers equals more revenue.

Think of it this way. When you want to buy clothes, where do you go? What stores do you shop at? You shop at the store with the lowest prices. You look for bargains. You look for sales. You try to buy the lowest priced items. You go to the store with the lowest prices. You go to Walmart. You go to Amazon if they have better prices.

When you're shopping, you try to get the best deals. This way your money goes farther. You can buy more with it. You can get more stuff. Or you can keep more of your savings if you want. You can save. You can get out of debt. There are so many options.

Taxes are the same as store prices.

When you go to a yard sale what do you do? You see something for $20, you say, “Would you take $15?” More often than not they accept your lower price. If the product is 50 cents, you just pay the 50 cents. This is because it’s not worth your time to bargain for such a low price.

Taxes are the same way. If they are high, you find ways to get around paying them. It’s worth your time to bargain. When they are low, you just pay them.

The end result is the government makes more money off tax cuts than with tax hikes. When taxes are low the government makes more money. You have more taxpayers. You have fewer people trying to find ways to hide their money and not pay high taxes. You have more money coming into the government.

I can give you three real-life examples. You have the Warren G. Harding/ Calvin Coolidge tax cuts of the 1920s. You have the Kennedy tax cuts in the 1960s. And you have the Reagan tax cuts in the 1980s. They all resulted in an economic boom. They all nearly doubled the national income over the ensuing ten years.

There you go. I just put an end to the myth that tax cuts cost too much. I put an end to the myth that you have to find a way to pay for tax cuts. I just put an end to the myth you can't afford tax cuts.

Tax cuts for the wealthy? Busting The Myth

You hear a lot from democrats about how unfair it is to give tax cuts for the wealthy.  One thing that is interesting about this is that most wealthy people do not even pay taxes. You have men like Bill Gates and Warren Buffet chiming that they don't think tax cuts for the wealthy do anything to stimulate an economy. Yet they don't pay taxes, so they don't care if taxes stay high.

Isn't that interesting? And this entire premise that tax cuts are for the wealthy is poppycock to begin with, considering you cannot tax wealth.

Let's use Buffet and Gates as our examples. They do not have jobs, per se. They have their money invested in various places, such as the stock market. That's where they make their money. They do not receive pay checks. In this way, they do not make income. Therefore, they do not pay taxes.

What they do is they collect capital gains. They are affected by the capital gains tax. But they are in no way affected by the income tax.

So, you see, the wealthy, like Buffet and Gates, got wealthy because they made good investments. They did not get wealthy because they were paid a huge salary or wage. So, you can raise the income tax to 90% on the top income bracket -- which is where it was before the John F. Kennedy and Ronald Reagan tax cuts --, and it will have no effect on the truly wealthy.

So, given our economics 101 lesson here, you can see clearly that there is no such thing as tax cuts for the wealthy. Wealth cannot be taxed. They might make some income, but the majority of it is accumulated wealth which cannot be taxed.

So, people that are wealthy, like the Kennedy's, like Warren Buffet, like Bill Gates, they champion for higher taxes, or at the very least don't argue against them, because they don't have to pay taxes anyway. They believe in social justice, where you solve problems by spending other people's money, not their own.

Interestingly, say Donald Trump gets his tax cuts through Congress. It won't be a tax cut for the wealthy. It won't even be a tax cut. What it will be is a tax rate cut. Anyone who pays taxes will see a cut. We discussed how tax cuts increase revenue to the government, they do not decrease revenues in my last post.

If Trump cut taxes, it would not be on the wealthy, unless you consider the 48% of people in this country who actually pay taxes to be wealthy (and, by the way, that's not even possible).

Further Reading:

• Articulating Ideas: What is Trickle Down Economics, a.k.a. Austrian Economics?
• Articulating Ideas: Trickle Down Economics (a.k.a. Reaganomics)
• Articulating Ideas: Who Pays All The Taxes?
• Rush Limbaugh: Why Rich Guys Like Gates Say Their Against Tax Cuts

Tax Cuts Do Not Cause Reductions In Federal Income -- They Increase Revenue

In order to put people back to work, Donald Trump has proposed legislation that would drastically cut taxes for both individuals and businesses. But democrats, and some republicans too, say this might backfire as it will also reduce income to the Federal government. Where did this rumor that increasing taxes increases Federal revenue come from anyway? It's a fallacy.

Rush Limbaugh gives a perfect example of how lowering taxes generates more government revenue thatn tax increases. He said,

"If it’s hard to understand lowering tax rates and increasing revenue, let me ask you this. Have you ever seen a store put things on sale? Obviously you have. Why do they do it? Why do they lower the cost of certain things to entice you to come in and buy them? Well, because they’ll sell more of it. The lower the price of an item, the more likely people are to buy it, and the more people that buy it, the more are sold, by lowering the price. When airlines are feeling the heat of competition, what do they do? They lower fares. If one airline lowers ’em, they all have to on the same routes. Or they’ll throw you off, right, or kill your rabbit, but don’t confuse me here.

On a government-run transportation system, what happens? When the Port Authority of New York and New Jersey is in a crunch and it’s not collecting enough money, what do they do? They stupidly raise fares. They do not try to get more people riding; they rip off the people who still are by charging them more. Does it ever work? Why don’t they reduce fares? Why don’t they lower the price of going across a bridge or getting on the subway? They never do. Well, I can’t say never. But you know as well as I do that mostly those costs increase. When a business raises the price of an item that you’re used to paying X for, are you more likely to go out and buy it again, or less likely, maybe look for someplace else to get something like it, something close to it? 

Look, this is simple math. It’s not even arguable. The Democrats have so corrupted our understanding of economics and productivity that lowering tax rates is now considered to be some kind of sop to the rich. I mean, it’s just profound to me, the damage inflicted on this country by the Democrats in their pursuit of perpetual power.

So true.

References and further reading:

• Rush Limbaugh: Democrats Know That Tax Cuts Increase Revenue, So Why Do They Lie About the Facts?
• The Washington Post: White House unveils dramatic plan to overhaul tax code in major test for Trump

Calvin Coolidge leads the Roaring 20s

Calvin Coolidge (1872-1933)
U.S. President (1923-1929)

Silent Calvin Coolidge became president in 1921 after the untimely death of Warren G. Harding. Calvin would see to it that the economic policies of his predecessor moved forward.  By doing so, he helped move the nation through the greatest period of economic prosperity in the history of the United States. 

John Calvin Coolidge was born in Plymouth Notch, Vermont, on July 4, to John and Victoria Coolidge.  He was painfully shy as a child, so much so that he had difficulty making friends. He was also afraid to talk to his teachers, and for this reason he struggled somewhat with his schooling.

While this was true, he proved to be a great public speaker, and perhaps for this reason he made a great lawyer and politician.  He learned about law by reading for a Northampton law firm, and in 1897 he earned a license to practice law.  He began his political career a year later when he was elected as Northampton city councilman.

In 1906 he was elected as a representative to the Massachusetts legislature, of which he served two terms.  While other republicans opposed the women's suffrage movement, Coolidge supported it. After taking a couple years off to spend time with his young family, in 1911 he was elected to the senate.  

As occurs many times in world history, what sets one person above another is being in the right place at the right time.  During his second year as senator, Coolidge was faced with the difficult task of dealing with the strike of textile workers from the mills in Lawrence, Massachusetts. 

The strikers marched toward the mills in 1912 claiming that they were underpaid. It became so concerning that law officials of Lawrence called in the state militia to protect the mills and keep the peace. 

Coolidge was able to convince the mill to give a wage increase instead of a cut, and the strike was thereby called off.  This was a huge success for the young politician, as it would help set up the stage for his future success as a politician.

The Massachusetts Militia tries to keep order in Boston, 1918.

A similar event occurred in 1918 after Coolidge had been elected governor of Massachusetts.  The war had left many workers in the U.S. with low wages, and the police force of Boston was no different. They formed a union and went on strike.

Coolidge sided with the police officers, saying they deserved fair wages.  On the other hand, he thought it was dangerous for them to be on strike, because no one was defending the people.  So he called in 4,800 National Guard troops to police the city. With Coolidge's approval, the commissioner refused to rehire the striking workers and trained new officers were hired and trained to replace them.

When Samuel Gompers, leader of the Federal Labor Union, complained to Coolidge about the harsh treatment of striking police officers, Coolidge said, "There is no right to strike against the public safety by anybody, anywhere, anytime."

The city of Boston agreed to provide its police force with large salary increases and improved working conditions.  Yet Coolidge's successful handling of the Boston Police Strike, and especially those 15 words to Gompers, gave Coolidge national recognition. 

Also setting the stage for his future success as a politician was the work of other politicians.  During the Great War the highest marginal income tax rate was increased to 74 percent in order to pay off the debt.  Although, after the country became embittered in a depression, there were calls by the public, media, nearly every republican, and some democrats to cut taxes in order to spur economic growth. 

Amid the depression of 1920-1921, republicans won both houses of Congress, and the executive -- Warren G. Harding was elected president -- in a landslide election. Cutting income taxes was at the top of the agenda.

Harding's secretary of the treasury, Andrew Mellon, was a strong proponent of cutting taxes, even going as far to say that taxes had become so high that many people found ways to get around paying, resulting in loss of revenue. Plus he believed the high tax rate was a burden to economic recovery and growth.

In April 11, 1921, Harding called for an extraordinary session of Congress to revise the federal revenue and tariff laws. There were some who called for significant tax cuts, although others noted the ongoing expenses of paying off debt accrued during WW1. 

Ultimately, the bill that was signed by Harding cut the top marginal tax rate from 74 to 58 percent.

After Harding died, Silent Calvin Coolidge saw to it that the economic policies of Harding were continued.  He would sign the Revenue Act of 1924 that reduced the top marginal rate to 46 percent, and the Revenue Act of 1928 that reduced this rate to 25 percent.

On top of this, Harding, before he died, was able to cut federal spending by 40 percent, making him, and Coolidge, the only presidents ever to reign in both spending and taxes after passages of the 16th amendment allowing Congress to levy taxes on individuals and corporations.  

As a result of the Harding/ Coolidge spending and tax cuts, what occurred over the next several years was nothing short of amazing, and a quintessential example of what would ultimately be referred to as Supply-Side economics. 

Between 1921 and 1928 , revenue to the government rose from $719 million to $1164 million, or a whopping 61 percent.   So, through the hard work of both Harding and Coolidge, the 1920s was the greatest period of economic expansion in the history of the United States.  

The economy during the 1920s grew faster than any time in American history up to that time, and America became the richest country in the world. The stock market and land values soared, and there were more rich people than ever before.

Yet while the rich got richer, the middle class got richer and so to did the poor. The great part about this all was that it happened not by pushing forth progressive tax and spend programs, and not by robbing Peter to pay Paul, but by reducing the size and scope of the government, thus creating opportunities for all.  

People were happy during the 1920s, and this is best shown by songs such as "Happy Days are Here Again," by Richard Alger and Jack Yellen.

Without the burdens of government regulations and taxes, businesses had abundant resources to invent, create and produce. They were able to expand their inventories, build new buildings, and hire new workers.  The result was the lowest unemployment rate in the history of the United States.

Many corporations and individuals were raking in money like never before, and they obtained this money as a bi-product of the soaring economy. 

These excellent free market conditions lead to the Industrial Revolution, where entrepreneurs like Henry Ford were able to mass produce goods and services and make them abundantly available to the public at a decent price.  Skyscrapers were rising. Factories were becoming a common site,  and were hiring unskilled workers at a record pace. 

Electric appliances were making their way into homes, such as the dishwasher and washing machines, thus allowing women to finally get out of the homes and into the workplace.  This helped spawn the woman's movement which lead to women's suffrage.

It was during this time that luxuries such as the radio and telephone became common household objects, and vehicles such as the Model T were being purchased by people who never thought they'd ever be able to afford such a luxury.

In essence, this was the first time in American history where average Americans, even those who just a few years earlier were not very well off, were making enough money to not just to afford food and clothing, but material and luxury items to help them fully enjoy life (selfish things for selfish reasons).

Overall, there were plenty of jobs for everyone.  The rich got richer.  The middle class got richer.  The poor got richer.  And not only that, with the superfluous flow of money, people were happy too, hence the song: Happy Days Are Here Again.

Never before had there been a period of economic growth as what occurred during the Roaring 20s.  The gain in overall standard of living was unmatched by any historical period ever. 

This was called the roaring 20s. People were having fun, and it was the result of freeing society from the burdens of federal regulations and taxes.  It was an idea conceived by great men like Andrew Mellon and signed into law by great men such as Warren G. Harding and Calvin Coolidge.