The Disastrous Trump Tax Plan

By John T. Harvey – Designing a tax plan that will actually increase spending and therefore employment is really not all that difficult. All you have to do is meet two criteria:

1. The tax cuts must not be offset by spending cuts (or tax increases elsewhere).

2. The tax cuts must increase the incomes of those who will actually spend the money.

That’s it, that’s the whole story. And these give very clear guidelines regarding what to do in practice. For example, if you are cutting taxes, do it for the poorest people in the economy. Any increase in their income is guaranteed to create jobs because they will absolutely spend it.

“The rich donors who are part of the base would come out quite nicely from this proposal.”

Who in God’s name thinks this is a good idea? This does absolutely nothing to address the long-term problems from which the economy is suffering and very likely makes them worse.

The reasoning, we are told, is that when we cut corporate taxes they’ll invest and hire more workers. That represents a misunderstanding of the economic factors at work. more>

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