Tuesday, August 13, 2019

By the Numbers


Have the Trump tax rate cuts worked? Have tax receipts gone up despite large corporate and personal tax rate reductions? Well, here are the numbers: Tax Policy Center Table. Study them carefully and then I will chime in ...

As can be seen (in current dollars), federal tax receipts went up slightly from 2017 to 2018, the first year of the tax rate cut ... this is due to our economy growing even faster ... so it did pay for itself. But this increase was still slower than Trump had promised ... and he blames this on the Fed’s seven interest rate hikes in 2017 and 2018.

And such economic growth and tax receipt growth are forecast to increase again this year. After accounting for our low inflation, this increase (in constant dollars) is even greater. However, these 2019 and 2020 forecasts may be cut back due to the drag being felt from our trade war with China.

Unfortunately, Trump is emulating Obama with his firehouse spending ... making our deficit to expand once again and causing concern for our longer-term economic strength.  Yes, we can attribute this to a rebuilding of our military and locked-in entitlement spending growth. But we don’t have too many more years of such deficits before things will really bite. The forecasted deficits displayed in this table are a little scary.

More Fed rate cuts and a settlement to the China trade war would be helpful.

2 comments:

ChillFin said...

According to the Heritage Foundation, you are right to say "rebuilding" our military. Apparently, it got so depleted in the Obama eight years that it will take until 2050 at this sustained rate of the military budget to get "rebuilt" fully. That means that we could be engaged in two major wars concurrently. To get there they will need to throttle back my Medicare and my Social Security, two fundings I funded directly. Makes sense...

George W. Potts said...

Who needs Medicare anyway with Xi as your president ...