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Trump Tax Cut Is Already Working

Tax Form1040
Tax Form1040

With the recent Walmart announcement of an increase in their starting wage and then Fiat Chrysler opening a new plant with 2,500 jobs in Michigan, there are now more than 100 companies that have offered bonuses and benefit hikes to their workers due to the tax cut. An estimated one million workers have benefited. This after less than one month.  

Liberals disparage all of this as a "publicity stunt." To hundreds of thousands of families, this is a wonderful stunt and let's hope see a lot more examples of it in the weeks and months ahead.

The stock market has reached eight new highs since the tax bill took effect on January 1. Workers are more optimistic about the job market than any time in at least a decade.

I helped work with candidate Donald Trump to refine this tax reform plan, and I was ridiculed as too optimistic on how it might help the economy. But already Trump's economic accomplishments have managed to exceed my lofty expectations. The tax cut isn't the only factor here – but you'd have to be wearing ideological blinders not to see a link.  

We are also learning that taxes influence how politicians behave. ‎For many years, the blue state governors have argued that their high tax rates don't cause people to move – even though the two highest income tax states, California and New York, have each lost about one million residents to other states over the past decade.  

But ‎now that their high tax rates are no longer tax deductible, the incentive to leave is magnified and these governors, like Andrew Cuomo of New York, are leaping into action. Some blue state governors and mayors are examining whether they can convert their income taxes into payroll taxes (which could be deductible from federal taxes as a business expense for employers) as a way to preserve federal deductibility. Some are even threatening to sue the federal government – as if this tax deduction were a constitutional right.  

California and New York officials are investigating whether their states can convert income tax payments into tax deductible charitable contributions to the state government. Good luck with that.

Why go to all this trouble if taxes don't matter?
Then there are the charitable organizations, including the Catholic bishops, who are complaining that doubling the standard deduction will lower donations to charitable causes because far fewer people will deduct gifts from their taxes. Steve Taylor with the United Way argues that "charities are subject to the old adage, if you tax something, you will get less of it."
Well, yes, every politician in America should hold that thought, especially when they contemplate higher taxes on work, profits, saving and so on. But in this case, the higher growth from the lower tax rates are likely to lead to more income, and this to higher, not lower, charitable giving, just as happened in the 1980s when tax rates fell from 70 to 28 percent

The timeless economic lesson here is that taxes profoundly influence how and where we live our lives. We tax cigarettes and booze because we want people to consume less of them. There are proposals all over the country to tax soda pop, sugar, ‎and carbon emissions so we produce and consume less of them.
So why is it so hard to accept the reality that if we lower taxes on virtuous activities – work, investment, starting a business, or saving for retirement – we will get more of these? And why is anyone surprised that this is already starting to happen?  ‎‎

By the way, for the same reason that California, New York and New Jersey politicians are angry, so are government officials in China, Mexico, India, and all of Europe about America slashing its corporate tax rate from 35 to 21 percent. That giant sucking sound is capital and jobs from all over the world coming to low-tax America.

Meanwhile Democrats in Congress – every one of whom voted AGAINST the tax bill – keep running around the country saying if they win the midterm elections, the top item on their agenda will be to repeal this policy, one that's already creating jobs. Wouldn't it be wonderful if they started rooting for America rather than against it?  

Stephen Moore is a senior fellow at the Heritage Foundation and an economic consultant with Freedom Works. He worked as a senior economic advisor to the Trump campaign.

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