Title: Kudlow Speaks Out: Debunking False Rumors About Trump Tax Hikes
Larry Kudlow expresses skepticism towards allegations of a Trump tax increase.
Hey there! Let's talk about tax hikes, shall we? Last week was Tax Day, but instead of laying those pesky rumors about a GOP tax hike to rest, we got a Bloomberg piece titled "Millionaire Tax Hike Gains Steam as Trump Signals Openness."
Now, 'openness' doesn't necessarily mean the President would endorse it. After all, he's known for considering a ton of stuff before finally rejecting it. That's why I believe this won't be something he'll sign on to. Remember, promises were made, promises were kept. I don't think ol' Trump will go for a tax hike.
The promise was to extend the 2017 tax cuts, which includes keeping the 37% top bracket, 3% cuts for lower brackets, doubling the standard deduction, and more. The Bloomberg article suggests higher tax rates as a pay-off. But that doesn't make sense because the current policy baseline, which merely extends the 2017 tax cut, is deficit-neutral. And fun fact, 44 Republican Senators and about 180 Republican House members have signed Grover Norquist's 'no tax' pledge.
If Trump pushed a tax hike, the big, beautiful reconciliation bill would crumble. Moreover, small business owners, who generate a large chunk of the economy's jobs and income, are already uneasy about higher tariffs. Why add another tax burden to their plates?
Trump, a small business champion with a solid understanding of the Laffer curve, knows that higher tax rates lead to lower revenues due to weaker economic activity and tax avoidance. The wealthy can afford top-notch tax accountants, after all. By the way, the top 1% already pay almost half of the income tax.
Higher rates on top earners might offset an expanded state and local tax deduction, but really only impacts high earners. So, Trump raises taxes on high earners, but simultaneously lowers their tax burden with a bigger tax deduction? That doesn't add up. Trump's a common sense kind of guy.
Unfortunately, some Treasury officials have been floating around talking points about exploring a variety of ideas to keep the total cost of the tax bill in check. But these officials would be better off sticking to Trump's policy, which is to extend the successful 2017 tax cut bill.
Oh, Trump's added some tax additions, like tax-free tips for service workers, tax-free overtime, and tax relief for seniors. He's also introduced a 15% 'made in America' corporate tax and immediate expensing for factory investment. However, these steps fall outside the current policy baseline and could be financed by tapping into Elon Musk's Dogecoin savings or tariff revenues instead.
Trump's determined to reprivatize our economy, injecting heaps of new dynamism and risk-taking in the process. He's stated this a million times already. Why would he want to stifle that by raising taxes?
All in all, these reasons, along with Trump's consistent stance on tax cuts, make it highly unlikely for him to sign off on a tax hike.
- The President has shown openness to discussions about a millionaire tax hike, yet Kudlow believes he won't endorse it, considering the promises made and kept during the GOP's 2017 tax cuts.
- The Bloomberg article suggests higher tax rates as a pay-off, but Kudlow argues that the current policy baseline, which extends the 2017 tax cuts, is deficit-neutral.
- The Bloomberg article's proposals don't add up, as Trump would simultaneously raise taxes on high earners and lower their tax burden with a bigger tax deduction, according to Kudlow.
- Small business owners are uneasy about higher tariffs, and adding another tax burden wouldn't benefit the economic growth they generate.
- Trump understands the Laffer curve, which states that lower tax rates lead to higher economic activity and revenues, and higher tax rates can lead to lower revenues due to weaker economic activity and tax avoidance.
- Some Treasury officials have been discussing exploring a variety of ideas to control the tax bill's cost, but Kudlow advises they should stick to Trump's policy of extending the successful 2017 tax cut bill.
- Trump has made it clear that he's determined to reprivatize the economy through steps like tax-free tips for service workers, tax-free overtime, and tax relief for seniors, but these steps fall outside the current policy baseline and could be financed through alternative means such as tapping into Elon Musk's Dogecoin savings or tariff revenues instead.
