John Tamny appeared on The John Batchelor Show, listen here:
☕ Jimmy Kemp and Sean Rushton appear in today’s Wall Street Journal:
The dollar-euro exchange rate has moved 20% eight times in a decade, causing crisis and stagnation.
Don’t forget to pay your taxes today!
☕ Steve Forbes drops the hammer on the Border Adjusted Tax (BAT):
Here’s how, in essence, this sneaky, anti-consumer tax works. Importers will no longer be allowed to deduct an item as a business expense. To simplify things, let’s say a store imports a pair of sneakers for $40 and then sells them for $50, making a $10 profit on which it would owe taxes. Under the Republican plan, however, the retailer wouldn’t be able to deduct the $40 it paid for the sneakers. In fact, it would owe taxes on the entire $50! And who, ultimately, pays this tax? You, the consumer, in the form of higher prices or fewer choices of where you can shop. Retailers and their customers will be hit.
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But enacting a big, brand-new tax to finance cuts in old taxes is a dangerous business, especially in the way the Republicans are going about it. Democrats will gleefully remind voters why prices are going up, conveniently ignoring the tax cuts. Moreover, the GOP border adjustment tax is a but a small step away from a full-blown value added tax, which has financed the bloating of governments around the world. Democrats will someday be back in power, and they won’t hesitate to either ramp up this GOP-created tax or go for the VAT. This would be hypocritical–rip apart the Republicans over this tax, and then go on to compound their felony. A VAT would crush future U.S. economic growth rates, just as it has in Europe and elsewhere.
Consider this astonishing fact: In the mid-1960s government spending in Europe as a proportion of their economies wasn’t much different from our own. Growth rates matched or exceeded ours. Then Europe discovered the VAT. Spending ballooned and growth slowed to a crawl, consistently clocking in at significantly lower levels than Uncle Sam’s.
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The GOP should drop this tax scheme. Why create unnecessary conflict and damage our new President? Republicans shouldn’t be constrained by the Congressional Budget Office’s antiquated way of measuring the economic impact of changes in taxes. Drop the green eye shades, and go for big cuts that would turbo-charge the economy.
Sean Rushton has this in the Wall Street Journal this morning.
A soaring currency could slow exports, fueling populist anger. Time for another Plaza Accord?
Thank you to the Jack Kemp Foundation for this:
Also, The Supply-Side Revivalist shared this today.
The heart of Keynesianism is that the consumer drives economic activity via consumption and that an economy suffers when individuals “save too much”. However, this is just not so. One simply cannot consume before producing something to exchange first or obtaining the ability to consume from another (such as a family member, bank, or other financial intermediary). If you doubt me, quit your job and see how long you can live on your own after you have burned through your savings. Good luck with that.
By Larry Kudlow and Brian Domitrovic
Hurrah for the 50th anniversary of the tax cut championed by JFK, signed by LBJ, to spur growth.
At the end of the article….
Mr. Kudlow is host of CNBC’s “Kudlow Report.” Mr. Domitrovic is chairman of the history department at Sam Houston State University. They are writing a book on the JFK tax cuts, to be published by Penguin next year.