Trump administration announces tax reform plan

The dialogue has been dominated for too long by a single underlying assumption, that the sole and only purpose of tax policy is to fund the government. As long as that is the dominant narrative in Congress and the media, it will be hard to focus on optimal tax policy.

Yes, tax revenues fund the government. They also affect incentives to work and invest, both of which drive economic growth. A singular focus only on funding the government--the Obama approach--inevitably ends up with government taking too big a share of the pie and disincentivizing business investment and economic growth. That is why the Obama economy was so anemic.

Despite the success with which Democrats derided supply side economics with the narratives "tax cuts for the rich" and "trickle-down economics," supply side approaches actually work. Under Coolidge, Kennedy, Reagan, and Bush reductions in marginal tax rates have been followed by robust economic growth.

Time to teach a new generation about supply side economics.

The White House announced a tax reform plan Wednesday which would reduce the number of income tax brackets, and cut the top rate from 39.6 percent to 35 percent.

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