In this week's Liberty Update we highlight the potentially catastrophic threat of H.R. 3, the healthcare…
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Notable Quote: WSJ on H.R. 3, Biden & Pelosi's Dangerous Healthcare Bill

In this week's Liberty Update we highlight the potentially catastrophic threat of H.R. 3, the healthcare and drug price control bill that Joe Biden and Nancy Pelosi are attempting to rush through Congress.  The Wall Street Journal helpfully offers further insight this morning on how H.R. 3 would threaten lifesaving U.S. pharmaceutical innovation and leadership, including on things like the Covid vaccines:

Companies that refuse the government’s price must pay a 95% excise tax on all revenue they generate from that drug in the U.S.  They’d also have to offer the government price to private insurers.  There’s no “negotiation” when a gun is pointed at your head.  A new study in the Journal of the American Medical Association estimates that drug spending in the U.S. would…[more]

September 23, 2021 • 10:23 AM

Liberty Update

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Trump's Tax Proposal: An Excellent Framework Print
By Timothy H. Lee
Wednesday, May 03 2017
Liberals' other reflexive criticism is that we can't cut taxes and risk higher deficits. But America's debt problem didn't germinate due to insufficient taxation, but because of out-of-control spending.

Last November, Americans said they wanted change in Washington.  They also said they wanted to get the economy moving again. 

The bold tax reform outline that President Trump unveiled last week shows that he's doing his part. 

Although important details remain unaddressed and subject to negotiation with Congress, Trump's plan offers a remarkably encouraging pro-growth framework to accelerate our economy, reduce complexity and finally make America much more competitive globally.  It also confirms that Trump seeks to honor the supply-side promises of his campaign, just as Justice Neil Gorsuch's nomination did regarding his judicial promises. 

Accordingly, it's now up to Congress not blow the opportunity that Trump has presented, and for American voters to demand that we finally achieve major tax reform for the first time since Ronald Reagan's presidency. 

So what's in the outline, why's it so significant? 

Most importantly, after eight years of unprecedented national stagnation under Barack Obama, Trump's reform will ignite economic growth.  Never in recorded history had the U.S. gone ten years without once reaching growth of at least 3%, until Obama.  Indeed, the U.S. average since World War II had been 3.3%, but we averaged approximately 1.5% over the past eight years. 

Anyone seeking the source of American malaise should look there first.  Too many businesses stopped investing, and too many people simply started giving up. 

The good news is that we can return to faster growth through tax reform. 

To wit, the U.S. continues to suffer the developed world's highest corporate tax rate at 35%, whereas the developed world average is closer to 25%.  The Trump proposal would slash the rate to 15%, and also significantly simplify the code and close myriad loopholes. 

Here's another extremely important reform.  In addition to imposing the developed world's highest corporate tax rate, the U.S. is also one of the only nations that taxes corporations twice - companies pay the applicable rate in the nations where profits are earned, and then again at the high U.S. rate if companies attempt to bring those earnings home.  The Trump plan would finally restore sanity and common sense by allowing income to be taxed only where it was earned. 

In recent years, many corporations have been driven to relocate their headquarters to more hospitable overseas locales, and jobs along with them.  They've also parked their earnings overseas rather than bring them back to the U.S. to spend, invest and hire because of our punitive code.  This reform would constitute a major step in halting that hemorrhage. 

Speaking of business investment, the Trump framework targets stubbornly weak spending on such things as new machines, technology and factories by incentivizing capital purchases.  Lowering rates and ending double taxation would free up billions for that type of investment, which in turn means more hiring and purchases from other suppliers in the chain.  That also improves productivity due to newer and better facilities, which in turn improves businesses' bottom lines and their employees' compensation. 

In that way, tax reform means a pay raise for working Americans. 

Trump's plan would also allow small businesses currently filing under the individual code to benefit from the new 15% rate as well, thus harmonizing and flattening the business landscape and reducing complexity. 

For individuals, Trump's proposal simplifies our maddeningly complex code by reducing the number of brackets from seven to three - 35%, 25% and 10%, respectively.  Although dishonest class warfare cries of "tax cuts for the rich" are inevitable, the plan doubles the standard deduction to $24,000.  Additionally, families with children could qualify for higher tax credits than under the current code.  That's more money in everyday Americans' pockets, and it also reduces the incentive to itemize, thereby reducing complexity. 

Further targeting complexity, Trump's outline ends the current endless litany of deductions, with the exception of charitable donations and home mortgage interest.  That will elicit howls from deep blue states like California and New York, since it ends the existing deduction for state and local taxes.  But high-tax states shouldn't be rewarded for their poor tax policy choices vis-a-vis more competitive states, and the fact is that approximately 90% of those deductions are currently taken by people earning over $100,000.  So much for liberals' class warfare propaganda. 

Liberals' other reflexive criticism is that we can't cut taxes and risk higher deficits.  But America's debt problem didn't germinate due to insufficient taxation, but because of out-of-control spending.  To illustrate, over just the past six months the federal government collected a new record amount of individual income taxes and payroll taxes.  Unfortunately, spending skyrocketed under Obama, leading to a doubling of the national debt in just eight years.  The way to reduce our deficits and debt is to restrain spending, not take more money from Americans' earnings. 

To be sure, many details remain subject to negotiation and Congressional compromise.  But Trump's plan offers an extremely encouraging outline, one that the final result should broadly reflect. 

But that will take fortitude from Congress, as well as from voters who said they wanted precisely this type of change last November. 

Quiz Question   
What is the single deadliest disease epidemic to the U.S. population in history?
More Questions
Notable Quote   
 
"According to the left-of-center Tax Policy Center, Biden's tax plan will raise taxes on 75% of middle-class families next year and 95% of families over the long term. Biden's policies are already slowing the economy. In August, the U.S. added just 235,000 jobs, a far cry from estimates that 720,000 jobs would be created. The economy has over 600,000 fewer jobs than the Biden administration boasted…[more]
 
 
—Grover Norquist, President of Americans for Tax Reform
— Grover Norquist, President of Americans for Tax Reform
 
Liberty Poll   

Pres. Biden is seeking IRS authority to monitor every American financial transaction exceeding $600. Is there any legitimate government reason you can think of for such micro-monitoring of individual financial transactions?