Sunday, October 22, 2017

When Corporate Taxes Go Down,Wages Go Up!

That's an economic principle that the loony left liberals don't seem to understand or grasp. Anytime tax cuts are proposed and enacted, the economy prospers and along with it the wages of employees increase exponentially. When corporations (and individuals) are able to keep more of their income (money), they will spend it for more goods and services and expanding their business, not hoard it away “in the mattress”.

The argument against tax cuts is that it will increase our total deficit by cutting down on the revenue that the government collects and needs in order to run the government. But, if history is any precedent, when tax rates are reduced to fair levels, the revenue to the government actually goes up. When presidents JFK, Ronald Reagan, Bill Clinton, and George W. Bush lowered taxes the revenue to the government went up. Sound crazy, that by lowering taxes the revenue goes up, well, let's try to make some sense of this dichotomy.

Let's take a company, for example. If a company could keep more of its profits (income), it then could expand its business and as a result, hire more workers. The more profits the company makes the more taxes it pays. The more workers employed the more taxes are paid by the workers to the government, even at the lower rates for individuals. It's something like when a company lowers the prices of its goods and services, the more goods and services are then sold because the prices were cut, then the increased volume, by lowering prices, made up the difference of lower tax rates by increasing the revenue to the company, the worker, and to the government in the form of taxes.

The Trump plan, which lowers the corporate rate from 35% to 20%, is geared to make the United States more competitive around the world. The plan also allows companies to immediately deduct 100% of plant and equipment costs - this change will encourage companies to buy more computers and trucks and hire more office workers and drivers. It is, therefore, a well known fact that when you lower corporate taxes, employee wages will go up because the company has more revenue to spend on expansion and in being able to hire more workers, contrary to what what the Democrats have been telling us in their hysterical opposition to the Trump tax plan.

Let's take a look at our economic history. Back in 1962, under President John Kennedy, when he slashed investment taxes, we experienced 8 years of roaring growth - 5% a year. In the 1980's, President Ronald Reagan slashed the rates again, giving the nation nearly a decade of robust 3.8% growth. In 1996 president Bill Clinton lowered the capital gains rates and the government revenue went up. In 2003, President George W. Bush again made tax cuts and again boosted the economy, which produced 4% growth for 6 straight quarters. Then we hit the “mortgage melt down” crisis, in 2008, and the start of a prolonged recession at the start of President Obama's presidency, and the beginning of his less than successful economic policies in trying to get us out of the recession.

Compare the economies of the presidents preceding President Obama with that of the 8 years of the Obama presidency, with high taxes and over regulations, which discouraged companies from investing and encouraged them in keeping much of their money overseas (to avoid our high taxes). In Obama's 8 years, we never had more than a 2% GDP (it averaged about 1.5% over the 8years). So, from learning from our past economic history, if you roll back regulations and cut taxes, the economy will surge, not stagnate like in Obama's two terms.

The Democrats claim that the Trump plan will blow a hole in the deficit, but don't be fooled, the real problem isn't that taxes are too low, it's that government spending is too high. The Republicans want to cut spending and the Democrats want to increase spending.

So, as you can see, from past history and from what we have shown in this editorial, when you you cut corporate taxes, therefore stimulating the economy, employee wages will go up as a result of the tax cut stimulus. That is an Economics 101 fact.

You can expect more demagoguery from the Democrats in trying to shoot down Trump's tax plan, because deep down the Democrats realize that if Trump's plan gets enacted, the economy will boom and it will ensure that the Republicans will remain in control of the government for years to come.

Conservative commentary by Chuck Lehmann

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Bob LeBlanc said...

Only in America could the government collect more tax dollars from the people than any nation in recorded history , but spend a trillion dollars more than it has per year, for total spending of $7 million per minute, and complain that it doesn't have nearly enough money.

Robert Sagers said...

Isn't it ironic that the top 10% of taxpayers who pay 70% of all income taxes, are accused of not paying their "fair share" by people who don't pay any taxes at all? And also, isn't it ironic that the two biggest bashers of rich people, Bernie "The Commie" Sanders and Elizabeth "Pocahontas" Warren, are both millionaires who own several houses? Is their middle names "hypocrite"?