The Trump Tax Plan

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I specialize in debunking complex theories and explanations in a minute or less with just a sentence or two. First let me say that any change to the tax code benefits those with the balance of political power and hurts everyone else. Since most of the political power is possessed by a small fraction of citizens, any change in the tax code will harm all but a few citizens. Tax reductions that are not preceded by spending cuts are always a net loss to the country as a whole.

Has there been a reduction in spending? No, Trump is promising increases in spending. With that said, the whole plan is bunk and just another gift to the rich.

What attribute must any good system of taxation possess? A good system of taxation always keeps citizens aware of what government costs. Taxes should go up when government spends more and go down when it spends less. Does Trump’s plan do this? No it does just the opposite. It is a bad plan and a license  to spend without bounds.

If citizens are unaware of or confused about what government costs there is no way for citizens to rein in government for spending too much. That is actually the goal of the type of tax changes Trump is recommending.

Why am I against a 15% corporate income tax? Corporations are unique in that they can levy taxes on citizens just as government can. Citizens cannot force others to do things like buy gas with ethanol in it. Corporations have enough political power to dictate monetary policy to the Federal Reserve, keeping their profit margins high while lowering real wages. Ordinary citizens do not have these kinds of privileges. Take away the ability of corporations to use government as a tool and 0% is a reasonable tax for them to pay given that shareholders are already taxed on corporate profits as they are distributed. Given the enormous power corporations have over government policy, they are paying way too little as it is.

About Fantasy Free Economics

James Quillian is an independent scholar and economist.
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