Right On: Economy booms, rich pay more taxes

May 16, 2018 Utah Channel 3

OPINION — Southern Utah and the rest of the country are finally rebounding from the Obama administration’s stunted recovery.

Credit belongs to reining in nanny-state federal regulations and to Republican tax reform.

No longer smothered by picayune federal regulations and the fear of even more to come, the economy began a dynamic growth surge last year. Now with Republican tax reform in place, we’re finally seeing signs of the economic dynamism characteristic of the world’s largest free market.

We had far better 2018 first quarter growth than in Obama’s last several years. Economists are united in predicting that 2018 will be our best year since before Obama’s hyperregulatory, tax-raising administration took over.

Jobs are plentiful. According to National Federation of Independent Business Chief Economist William Dunkelberg, “The increase in new business establishments is running well ahead of eliminations, a real boost to new employment.”

The black jobless rate has fallen a remarkable 1.3 percentage points to 6.6 percent since April 2017. The jobless rate for Hispanics has fallen by 0.4 points in a year to 4.8 percent, matching its record low.

In fact, employers large and small nationwide are having problems filling jobs. Southern Utah help wanted signs are as plentiful as springtime weeds. If you want work, you can find work.

The federal Bureau of Economic Analysis recently reported that workers’ inflation-adjusted earnings after taxes rose 3.4 percent in the first quarter of this year. The bureau specifically credited tax reform for higher wages as well as lower taxes. That’s a lot more than the crumbs Nancy Pelosi said we’d get.

As in boom times past, construction jobs lead the Southern Utah pack. Houses are rising out of the ground all over the area, limited only by the availability of construction workers. Try finding a plumber, electrician or cabinet maker for a home remodel job.

Business investment is booming just as Republican tax reformers said it would. Companies are investing money that had been trapped overseas by our previous punitive tax laws, the most confiscatory in the world before the Republican reform.

Union Bank of Switzerland reports that capital spending by large companies surged 39 percent so far this year. Research and development spending is at its highest proportion of sales since at least 1990 according to Goldman Sachs. It’s at its highest proportion of gross domestic product since the government started tracking it in 1959.

The Wall Street Journal believes that “Barack Obama’s anti-business policies stifled investment and deregulation and tax reform seem to be liberating it.”

All these investments lead directly to productivity gains that in turn lead to higher wages as each worker can produce more goods and services.

In Southern Utah, we don’t have much manufacturing. But business investment pays dividends here nonetheless. How about productivity-enhancing 4G mobile phone service and fiber optic cable connections to the world? 5G wireless service is next. St. George’s Tech Ridge will require major investments both in buildings and the equipment and furnishings that go in them.

Let’s talk taxes. Democrats and the mainstream media – but I repeat myself – have suddenly found national-debt religion, complaining about rising deficits. They ignored them during eight years of Obama’s spending blowout and anemic economic recovery.

You won’t hear it from them, but the nonpartisan Congressional Budget Office projects that as a result of tax reform, the economy will grow 3.3 percent this year. That’s up from 2.4 percent had Democratic taxes stayed in place.

The CBO estimates that this faster growth will result in higher federal tax revenue. Its new projections show an additional $1 trillion in tax revenue over the next 10 years because of the law. This year’s deficit will be a little higher but additional growth adds tax revenue in later years.

Consulting firm Strategas predicts that future tax revenues are likely “to surprise on the upside from current revenue estimates.”

Every time the federal government cuts tax rates, tax receipts grow. Why? The economy grows, incomes increase and more taxes are paid. When will anti-business, tax-and-spend Democrats learn?

So who’s paying this additional tax? All you heard from Democrats was that Republicans cut taxes for the rich.

But get ready for this: The nonpartisan Tax Policy Center estimates that high income Americans will pay an even larger percentage of personal income taxes than they did before. Specifically, the center estimates that the top 20 percent of earners will pay 87 percent of income taxes in 2018, up from 84 percent in 2017. Yet their share of national income will remain at about 52 percent.

Many of us in the lower 60 percent who paid taxes last year will pay none in 2018. Democrats should be cheering an even more progressive income tax.

So what’s not to like? To paraphrase a famous Groucho Marx line, “Who you gonna believe, Nancy Pelosi or your own paycheck?”

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews