Trump’s Tax Principles
The Wall Street Journal
April 26, 2017
The White House rolled out its tax principles on Tuesday, investing new energy in the first serious reform debate in 30 years. … [P]resident Trump’s outline resembles the supply-side principles he campaigned on and is an ambitious and necessary economic course correction that would help restore broad-based U.S. prosperity.
Many voters heard Mr. Trump’s make-America-great-again slogan as a promise to raise their incomes and improve economic opportunities after a long stagnation. Eight years of 2% growth since the recession ended in 2009 is the weakest recovery in the postwar era, and the result has been rising anxiety and diminished expectations for millions of Americans.
Faster growth of 3% a year or more is possible, but it will take better policies, and tax reform is an indispensable lever. Mr. Trump’s modernization would be a huge improvement on the current tax code that would give the economy a big lift, especially on the corporate side. The reform would sharply cut the business income rate to 15% from 35%, while simplifying the code for individuals and cutting some marginal rates.
The cuts would be permanent and immediate, and the rates are low enough to enhance the incentives to work and invest.
Mr. Trump’s plan is an opening bid to frame negotiations in Congress, and there are plenty of bargaining chips.
Republicans won’t get another opportunity like this to reshape the tax code for a generation.
The Trump principles show the President has made growth his highest priority, and they are a rebuke to the Washington consensus that 1% or 2% growth is the best America can do. Now Mr. Trump has to show results. If anything close to this reform can survive the political maelstrom, it will go a long way toward returning to the abundance of the 1980s and 1990s.