Cut Taxes Without Increasing the Debt
Both Republicans who control Congress and President-elect Donald Trump have plans to grant most Americans tax relief. They hope to inject real growth into an economy still recovering only anemically from the so-called Great Recession.
In reconciling their slightly different versions of tax reform, Trump and GOP lawmakers simply must keep one thing firmly in mind. It is the national debt, which will hit $20 trillion within a few days.
When outgoing President Barack Obama took office, the national debt was about $11 trillion. It has nearly doubled on his watch.
Under his predecessor, President George W. Bush, the national debt also skyrocketed. It nearly doubled during his tenure.
That is an unsustainable rate of deficit spending.
Republican congressional leaders say their tax relief plan is revenue neutral, meaning it will not increase deficit spending and thus, the national debt. Unfortunately, such promises are common, but too frequently empty.
Pledges that revenue losses due to tax cuts for Americans will be offset somehow by, for example, higher duties on imported goods often result in U.S. residents’ tax relief being erased by higher prices for many products.
One means of reducing taxes while not adding to the debt would be to cut the cost of government, of course.
Without tax relief, the economy will remain in the doldrums. So it should be provided — but without jumping out of the frying pan and into the fire by continuing to increase the national debt.