Theres little historical evidence that tax cuts actually pay off in boosting economic growth
WASHINGTON — President Donald Trump and congressional Republicans talk about their tax overhaul plan as if it’s a sure-fire bet for the economy.
Far from it. There’s little historical evidence that tax cuts actually pay off in boosting economic growth long-term.
And today’s combination of high federal debt and a tight labor market casts even more doubt on whether tax cuts will stimulate growth.
The heart of the GOP strategy is big tax savings for corporations and other businesses. Slashing taxes on companies large and small, the theory goes, will bring massive new investment in plants and equipment, job growth and higher pay for America’s long-suffering middle class.
Specifically, Trump administration officials predict that their tax plan will push U.S. economic growth to 3 percent per year from the 2 percent annual average that economists expect for the foreseeable future. The higher growth, officials say, would help create 12 million new jobs over the next decade.
To achieve those goals, however, Trump’s tax scheme will have to succeed where Republican as well as Democratic presidents before him have failed.
To bolster its case, the White House last month cited President Ronald Reagan’s massive cuts in 1986 and the effect they had over the following 10 years. Yet U.S. economic growth, as well as gains in jobs and income per person, was actually stronger in the decade before the Reagan tax change.
https://www.heraldnet.com/business/tax-cuts-wont-generate-as-much-economic-growth-as-trump-says/?utm_source=DAILY+HERALD&utm_campaign=ea72670796-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_d81d073bb4-ea72670796-228635337
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