Tax Day is a day that many American loathe because Uncle Sam bangs on the door and demands your tax return, which sometimes means more of your money.
For too long, the tax code was riddled with complicated law that required hiring a tax professional to fulfill the civic duty of filing taxes with the IRS. Over a billion hours of productivity is annually diverted from activities that could grow the economy and instead is spent on tax compliance.
Congress passed historic tax reform that simplified the tax code, and a lot of Americans are now learning exactly what tax reform means for them.
Often it is difficult to pinpoint the economic results of legislative action in Washington. While the verdict is still out on the full impact of tax reform, here’s what we know: The Trump economy is strong and the tax cuts are at least half of the reason why.
According to the Economic Report of the President, more than 2.6 million jobs were created in 2018 and wages grew faster over the previous year than any time since 2009. The U.S. economy grew by 3.1 percent from the fourth quarter of 2017 to the fourth quarter of 2018 — the fastest GDP growth in 13 years. Six million workers received an average bonus of $1,200. And, the economy experienced less than 4 percent unemployment for 12 months for the first time in 50 years.
Why are these data points important? First, they show that President Trump has generated an “economic boom” that we never got following President Obama’s Great Recession. They show that encouraging investment and entrepreneurship through tax cuts and deregulation is the recipe necessary to generate strong economic growth.
Tax cuts are good for the economy because they put more money and power back into the hands of the individual, which allows for the private economy to flourish.
Tax cuts don’t increase the deficit. Federal spending causes the deficit. We don’t have deficits because we tax too little — we’re currently collecting record levels of revenue. The issue is that we have deficits because government spends too much. When government increases taxes, it isn’t taking back America’s wealth. Government is confiscating your wealth. Every dollar spent by the federal government is an obligation to tax future generations to pay for that debt. It is, in essence, generational theft.
The major element that is missing in order to generate historic economic growth is fiscal restraint on federal spending. Last year, President Trump signed legislation passed by Congress that increased discretionary spending by hundreds of billions of dollars. He should have vetoed it.
As the Democratic presidential primary process is now underway, there’s a new race on the left to give as much “free” things to people as possible. Free health care, free tuition, free money. One estimate for the Green New Deal totaled more than $90 trillion, making the proposal the equivalent of economic Armageddon.
Our debt obligations should terrify politicians. The national debt exceeds $22 trillion and Congress is currently preparing to once again increase the debt limit without doing anything to rein in the out of control deficits. The discretionary spending increases agreed to last year will expire in September and Congress will undoubtedly punt fiscal sanity to the sideline and increase spending by hundreds of billions of dollars again.
The American people should think about federal spending increases the same way they think about tax hikes. A dollar spent is a dollar borrowed. A dollar borrowed is a dollar owed. A dollar owed is a dollar confiscated from the economy. When this happens, jobs will be killed, prosperity will be destroyed, and self-sufficiency will succumb to dependency.
Someday Uncle Sam will come knocking on the door demanding payment for all the deficit spending committed by irresponsible politicians. Imagine your child having to answer the door, because as a grown up, they will.
David McIntosh is president of Club for Growth, a nonprofit group that advocates for limited government. He represented Indiana in the United States House from 1995-2001.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.