December 23, 2017


Tax Bill Hysteria (Bret Stephens DEC. 22, 2017, NY Times)

"Our current corporate tax system is outdated, unfair and inefficient. It provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world. It is unnecessarily complicated and forces America's small businesses to spend countless hours and dollars filing their taxes. It's not right and it needs to change."

That was Barack Obama in 2012, with a proposal to cut rates to 28 percent. Other prominent Democrats who have previously called for cutting corporate taxes include Tim Geithner, Ms. Pelosi, and Chuck Schumer.

Maybe the current bill cuts the rate too far -- or, as I think, doesn't cut it far enough. Maybe the argument that companies will use additional revenues to hire more workers is too optimistic, if only because the United States is already close to full employment. Maybe they'll reward their shareholders instead -- which, however, probably means you, assuming you have an I.R.A.

And maybe there's something to be said for Google parking several billion dollars in profits in a Bermuda shell company, just to take advantage of the islands' zero rate. It's delightfully devious coming from the well-heeled apostles of "Don't Be Evil."

But the suggestion by senior Democrats that it is now a moral abomination to enact the very type of tax reform they themselves favored until quite recently smacks of partisan dishonesty, if not ideological hysteria. Many developed countries, including Germany, Sweden and Britain, have all slashed their corporate rates in recent years. Lo, the sky did not fall.

Now to the bad politics. Democrats think it's politically smart to oppose the bill because some 58 percent of Americans were against it, according to a recent poll.

A Times analysis of the poll also found that half of the people who will get a tax cut under the bill don't think they're going to get one, likely out of distrust for the president.

But nothing is so splendid in life or politics as a good surprise, and Democrats have positioned themselves to be on the wrong side of it. In 2018, according to the Tax Policy Center, 91 percent of middle-income filers will get a tax cut, averaging close to $1,100. That's real money, or at least enough to give Donald Trump and congressional Republicans a good opening for a "we told you so" moment.

The cuts also coincide with some of the most robust economic growth in over a decade.

The bill is too trivial to justify their reaction, which only serves to shift credit for the economy in coming years to the GOP.

Posted by at December 23, 2017 1:28 PM