In the article linked below, Brian Wesbury – Chief Economist at First Trust, explains how U.S. tax policy over the last several decades has move from an environment where cutting taxes makes new spending difficult to a situation where government spending is so high tax cuts are hard to pass.
From a macro perspective, President Trump’s plan seems to do much of what Democrats have asked for by shifting a larger portion of the tax burden on individual high-earners while just about everyone in the bottom 60% gets a tax cut. This is hardly an ideal supply side tax cut. Republicans on the other hand, have lost their way. Even with a majority in the house and senate, republicans have shown little enthusiasm for helping President Trump with his agenda.
This is a unique time in our history where a confluence of events have come together unexpectedly and produced an accelerating economic environment. I believe tax reform could be another factor potentially leading us to the strongest economy so far in the 21st century.
