4 Percent Eve. @TimmerKaine

Dec 07, 2017, 02:54 AM

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4 Percent Eve. @TimmerKaine

Kevin Hassett, the president’s chief economist, explained in his first speech in that role that a dynamic analysis of the corporate tax reform reveals a lift to “GDP per capita by approximately 4 percent over the first year.” He also explained that when America lowers its 35 percent tax rate on corporations – the highest rate in the world – then global companies will stop shifting their profits overseas. Median households should see wage gains of $4,000 once those inequities are removed, Hassett estimates.

Tax reformers should not be cowed into playing the zero-sum game. The whole point of fundamental reform is to remove gross and morally indefensible special interest tax breaks that make up the bulk of the current system. For example, why should residents of New York get a federal tax deduction because of high state income taxes when Texas residents essentially get no federal deduction since Texas has no income tax? Why should the people of low-tax Ohio subsidize the people of high-tax California? A simpler code means more efficiency, more fairness, more equality, as a worthwhile tradeoff for the existing imbalance. Republicans cannot promise everyone will pay less, but they can promise that all Americans will be treated fairly.

The third objection to the winners-and-losers narrative is the time horizon. Consider the nerd-beautiful but flawed chart in this data-rich story in the New York Times. Writers Quoctrung Bui and Ben Casselman examined the dynamic effect of the Senate’s tax bill as they understood it on Nov. 28. Each dot represents a household, with income on the vertical axis, and the net tax change on the horizontal axis. The green dots are winners; red dots the proverbial losers. But many dots are missing: Where are the blue dots for those new workers who will be earning incomes next year?