Haven’t you noticed that things are almost always more complicated and take longer than you thought? Well, that’s especially true in politics, where opposition and institutional mechanisms tend to make everything take much longer than anticipated.
Something like that seems to be happening to tax reform. Already, realism and pessimism seem to be overtaking the heady anticipation of significant tax reform that characterized the month or so after the reality of the Trump election set in. Timetables keep getting pushed back, such that it now seems that tax reform has been relegated to the fall.
That’s a mistake. The simple fact is that the economy can’t wait. Fourth quarter GDP grew at a measly 1.9 percent, which was below already mediocre expectations, and which means the economy never grew at 3 percent or better during the Obama years.
The economy is in tenuous shape, and interest rates are almost universally expected to rise, which won’t help. Frankly, the Trump administration won’t deliver on its promise of growing jobs and wages in time for the 2018 midterm elections if it doesn’t prioritize tax policy changes designed to encourage businesses to invest and hire.
That’s why we completely support the sentiments expressed by our friends Stephen Moore and Larry Kudlow in a Wall Street Journal op/ed earlier this week. Something positive must be done on business taxation, and it must be done as soon as possible. If overall tax reform is too complicated to pass soon with bipartisan support, Congress should pass growth-oriented business tax cuts now, and come back and do the rest in a second piece of legislation later this year.
Specifically, that could include:
- A reduction in the business tax rate to 20 percent or below,
- Immediate expensing of all capital spending (instead of depreciation), and
- Repatriation relief for foreign profits stranded in overseas subsidiaries.
These changes would stimulate immediate increased investment by business, which is the basis of real, long-term economic growth. And waivers from the more onerous requirements of Obamacare would also serve to encourage businesses to hire without concern for avoiding additional Obamacare expenses.
The economy can’t wait, and American workers have waited long enough. Getting the economy growing again should be the Trump administration’s number one priority.