What Scott Sumner Fears About the GOP Tax Reform

Scott Sumner nails this:

This is what I feared

The proposed GOP tax bill is not what it seems.  First of all, pay no attention to the media discussion of who gains and who loses—as they use naive models where stockholders are assumed to bear the burden of a corporate income tax, and the person who writes the check to the IRS is assumed to bear the burden of the personal income tax.  In the long run, markets adjust to tax changes and largely offset any distributional impacts.

Also pay no attention to the fact that taxes are supposedly being “cut”.  The GOP has no intention of cutting spending, and one way or another society must pay for all of that spending.  Money doesn’t simply grow on trees.  Yes, the “starve the beast” theory might have some validity, but most likely the Dems will largely offset any tax cuts with higher future taxes.  And meanwhile the larger budget deficits will be a drag on investment.

In these two paragraphs, Sumner has managed to summarize what will exactly occur with the GOP tax "reform" bill. Few others have done so at all, never mind with such shining brevity.

 -RW