Right On: More signs that Republican tax cuts are working

Stock image, St. George News

OPINION — Imitation is the sincerest form of flattery.

The mainstream media would have us believe that President Trump and everything his administration does is anathema to foreign governments. The leftist media decry his nationalism and disdain for international institutions and norms of behavior.

But there is nothing but envy when it comes to America’s high-flying economy: Most of the rest of the world is falling behind. Slowing in China – the world’s second largest economy – is of particular concern.

The fact that Republican tax cuts are working and working very well is great news for Americans and embarrassing for Obama’s economists who said it couldn’t be done. Virtually everyone who wants a job has a job: Our unemployment rate is at a multi-decade low.

Wages are growing again after Obama’s stagnation. The Atlanta Federal Reserve Bank reports year-over-year growth of 4.2 percent nationwide.

So what’s a government to do to join America’s economic boom? The answer from a number of countries around the world: Get on the corporate tax cut bandwagon.

Dan Clifton of Strategas Research wrote to clients saying, “We expect to see a wave of global fiscal policy [changes] in 2019. There is a global race for capital taking place and with non-US growth slowing, voters are unhappy. Politicians will need to deliver growth in 2019.”

Foreign governments are under particular pressure because the Republican tax law is making them look bad. Clifton adds, “US growth accelerated in 2018 while other regions slowed. This creates neighbor envy and more countries are looking to cut taxes.”

Imitating the Trump administration is exactly what is being proposed around the world.

First in line may be China, currently in a significant slowdown that could strain its people and all its trading partners including the U.S. Michael Smith writes in the Australian Financial Review:

China has put private sector tax cuts at the frontline of President Xi Jinping’s battle to combat a slowdown in the world’s second-largest economy with a package of rebates for millions of small companies economists say is worth [$410 billion].

China also outlined tax rebates targeting the manufacturing sector and higher tax deductions for research and development spending by companies.

Reflecting Chinese government thinking, Yang Zhiyong of the Chinese Academy of Social Sciences writes in Beijing Review:

“Bearing in mind global competition, the [Chinese] corporate income tax rate could be cut to 20 percent, or even 15 percent, for enterprises in specific sectors.”

Translation: Anything you can do, we can do better.

Beijing’s thinking is being repeated around the world. Bloomberg described how tax cuts have become a prominent issue in the Indonesian presidential campaign:

“Indonesian presidential candidate Prabowo Subianto is proposing deep tax cuts to stimulate Southeast Asia’s largest economy, copying the playbook successfully used by U.S. President Donald Trump.”

“Our corporate tax is one of the most expensive in the region,” Rizal Ramli, a former finance minister, told reporters in Jakarta. ‘‘Lower tax rates will make Indonesia more competitive.”

Yes they will, just as they have for this country.

European economies are lagging and along with China threaten a worldwide slowdown that even this country won’t escape. Angela Merkel’s successor in Germany is starting on the right foot: The new CDU chairman Annegret Kramp-Karrenbauer wants to save the German economy from a downturn with a tax cut.

“We need to consider how we can strengthen the domestic economy and our competitive situation, such as reducing the tax burden on businesses through a corporate tax reform,” she said.

Competition is a sure path to economic progress. That’s true whether the competition is between gas stations on opposite street corners or between countries worldwide.

Even Marxist central planners in China recognize that tax incentives matter, something Democrats repeatedly ignore. Democrats are all about redistributing slices of what they see as a fixed-sized pie.

Their latest dumb idea: Democratic Rep. Alexandria Ocasio-Cortez proposes a 70 percent top income tax bracket, a sure way to fall behind in Clifton’s race for capital.

In spite of what we’ve been told about how the Republican tax cuts increased the deficit, tax receipts actually increased in fiscal year 2018 and will increase significantly this fiscal year. The deficit increased because runaway entitlement spending increased even more.

It’s hard to keep a good idea like corporate tax cuts a secret. Copy cats are popping up all around the world.

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews

Copyright St. George News, SaintGeorgeUtah.com LLC, 2019, all rights reserved.

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