Suggested Readings: Taxes and Budgets

August 4, 2017

The last true reform, in 1986, under Ronald Reagan, reduced tax rates without losing revenue by eliminating swathes of tax deductions. Crucially, it was a bipartisan effort, which made it easier for Congress to take on the interest groups which avidly defend the benefits they gain from carve-outs.

President Trump and the Republican controlled Congress have promised tax cuts in 2017.  They have also promised to reduce spending and make other changes to the budget.  For some background on federal taxes and budgets, I am suggesting the following brief articles.

Phil Gramm and Michael Solon describe how “Reagan Cut Taxes, Revenue Boomed.” This demonstrated how tax cuts and deregulation can work to grow the economy while relieving the burden on tax payers.  However, because of the budget challenges facing the US now, the Economist warns that “Cutting Taxes Will Not Be Easy.”  (Of course, it never is easy to make changes to the way government functions.)  But it is possible to reform both tax and budget policy.  President Coolidge balanced the budget and reduced taxes by limiting government spending.  The results were strong economic growth, reduced burden on individual and corporate tax payers, and a boost to standard of living for the middle class.  Hopefully the President and Congress are open to the “Budget and Tax Lessons from President Calvin Coolidge“.

 

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