Thursday, December 14, 2017

The True Tax Gap Could Be as High as a Fantastic $12 Trillion!!

Robert J. Samuelson looks well beyond President Trump's silly, crony, tax reform bill, and it is a frightening but accurate look. He writes:
When historians examine President Trump’s tax program, they will surely be struck by a large and momentous contradiction. Although the nation faces endless budget deficits — and although the president purports to speak about the future — his tax program does little or nothing to curb long-term deficits and, arguably, might make them worse.

It is said that the tax gap of the Trump-Republican program — the net amount of the tax cut — is somewhere between zero (the administration’s position — the tax cut will pay for itself through stronger economic growth) and $1.5 trillion over a decade (the position of many economists who doubt much of a boost to economic growth).

Wrong, on both counts. A more realistic estimate of the tax gap is somewhere between $7 trillion and $12 trillion, again over a decade.

How do I get these fantastic figures? The answer is that I ignore Trump’s program altogether and simply deal with existing deficits, as estimated by the Congressional Budget Office (CBO). It’s not that I believe that Trump’s program will work as promised. I don’t. My real point is that, in many ways, it’s too small to matter.

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