President Joe Biden, while announcing his proposed 2023 budget Monday conceded, in effect, that former President Donald Trump’s tax cuts are working.
The numbers speak for themselves: The federal treasury took in over $4 trillion in revenues in fiscal year 2021 and is on track to receive over $4.5 trillion this year.
By way of comparison, the federal government took in $3.3 trillion in revenues in 2017, prior to the Tax Cuts and Jobs Act being implemented.
On Monday, Biden pronounced his $5.8 trillion budget plan first and foremost restores “fiscal responsibility.”
“The Trump tax cuts added $2 trillion in deficit spending and largely helped the rich and the largest corporations,” the president said.
Democrats have been throwing around these false talking points about the Trump tax cuts for years.
Many fact checkers have debunked the claims.
“Here we go again. Democrats have long attacked President Trump’s tax cut in misleading ways,” The Washington Post’s Glenn Kessler wrote in 2019, when he gave Biden four Pinocchios — the worst rating.
“Technically, the tax cut signed into law by Trump had an estimated revenue loss of a little under $1.5 trillion over 10 years. So Biden is rounding up here,” he explained.
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Not to mention the fact that Democrats always seem to calculate lost dollars without factoring in the economic growth tax cuts create, which generates new revenues.
Further regarding who benefited from the tax cuts, Kessler pointed to the liberal Tax Policy Center, which found “that 80.4 percent of all taxpayers would have a tax cut, compared with about 5 percent experiencing a tax increase. In the middle quintile, 91 percent would get a tax cut, averaging about $1,090, with 7.3 percent facing a tax increase averaging about $910.”
The increases were primarily due to the legislation limiting the amount of state taxes paid that could be deducted from the federal tax bill. High income earners from high tax states were the beneficiaries prior to the new limits being imposed.
“In the $50,000 to $75,000 range, 82 percent would get tax cuts, with people who got a tax cut ending up with an average of almost $1,000,” the Post reported, which is mainly due to almost doubling the standard deduction, doubling child tax credit and lowering the tax rates at all income levels.
So after falsely trashing Trump’s tax cuts on Monday, Biden conceded they are working.
“[W]e have generated a GDP growth of 5.7 percent, the best economic growth we’ve seen in this country in over 40 years. This has led to a substantial increase in government revenues and dramatically improved our fiscal situation,” he said.
Forty years takes us back to Ronald Reagan’s first term, when following across the board tax cuts, like those passed under Trump, the economy took off, experiencing 4.6 percent growth in 1983 and 7.2 percent in 1984.
It should also be noted that federal tax revenues doubled during the 1980s from approximately $500 billion to $1 trillion, as the economy grew nearly a third larger from 6.8 trillion to 9.2 trillion GDP.
That’s the whole point behind the right kind of tax cuts: They create increased economic activity, which leads to higher profits, more jobs and increased revenues.
Eighteen million jobs were created during Reagan’s eight years in office (when the population was nearly 100 million fewer than now).
During Trump’s term, prior to the COVID shut downs, the nation experienced its lowest unemployment rate in 50 years and highest number of people employed, ever — 160 million.
With the 45th president’s tax cuts still in place, we’re getting close to those numbers again.
On Monday, The Wall Street Journal editorial board highlighted that the cuts have worked as advertised in terms of revenue, as well.
After noting the record $4 trillion haul in FY 2021, the board wrote, “In the first five months of fiscal 2022 through February, federal receipts climbed a remarkable 26% from a year earlier. That’s $371 billion more — to $1.8 trillion in five months. Individual income taxes rose $271 billion, or 38 percent, to $975 billion. Corporate income taxes rose 31 percent, or $28 billion, to $117 billion.”
“This flood of taxpayer dollars — which CBO estimates will hit $4.53 trillion this year — would not so long ago have been more than adequate to fund Washington’s spending needs,” the editors added. “The federal government in fiscal 2019 spent $4.4 trillion.”
Biden’s 2023 budget calls for $5.8 trillion in spending, which is way too high.
His plan includes increasing the corporate tax rate from 21 percent to 28 percent, thereby making American businesses among the highest taxed in the industrialized world
The president would also allow the current individual tax cuts to expire in 2025 and impose a 20 percent wealth tax on those with assets of $100 million or more.
As the Wall Street Journal board concluded, “The current tax system is throwing off revenue to spend if the politicians would show a modicum of restraint. Yet the Biden Administration is proposing $2.5 trillion in tax increases over 10 years.
“That would take the tax share of GDP to new records, and it’s the last thing that taxpayers or the economy need.”
The Trump tax cuts are working, and the best thing Biden could do is leave well enough alone.