Steve Forbes, Ken Blackwell: Think big on tax cuts

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What President Trump's tax plan would really do

After lunch with the president McConnell said the plan could bring them all together, despite Schumer attacking the proposal before it is released; Mike Emanuel explains on 'Special Report.'

Let the Congressional Budget Office howl. It’s time for Republicans in Congress to understand what Reagan understood, what JFK understood, and what our friend and mentor Jack Kemp definitely understood: Big tax cuts produce big returns, and the more widespread the cuts, the larger the number of Americans who benefit from them.

If Republicans take off the self-imposed straitjacket of Congressional Budget Office revenue estimates based on unrealistically low growth rates and embrace bold, across the board tax cuts, they will trigger the economic growth that past cuts have produced. Tax cuts are simple - if you want growth, jobs, and a balanced budget, go big.

We cannot tax ourselves to prosperity or a balanced budget. The only times the federal budget has been balanced in the modern era were in 1969, courtesy of Kennedy’s tax cuts, and again in the 1990s after Reagan did the same thing (and that balancing would have happened sooner without the cost of Reagan’s military buildup, but that won us the Cold War so it’s easy to forgive).

Tax cuts have worked everywhere, around the world. Look at what happened to Singapore after they reduced taxes to incentivize growth. Its economy reached staggering heights and is still going strong.

Republicans – and any Democrats who would truly like to see their constituents lead better lives – should rid us of anti-capital tax policies and return America to a place that rewards hard work and entrepreneurism.

There will be no vigorous growth without huge tax cuts, both for investment and consumption. Congress needs to lower the corporate tax rate to 15 percent - not 20 percent - and remove taxes on overseas profits. Depending on whose numbers you believe, there is anywhere from $2 trillion to $3 trillion in U.S. corporate profits locked away offshore, held hostage by shortsighted tax policies that discourage companies from reinvesting their gains in domestic ventures. That has to end. Congress should also cut or slash the tax rate “for so called pass throughs” – partnerships, S -corps and the like – to 20 percent rather than the proposed 25 percent. This covers most small businesses which are big job creators and sources for innovations.

Don’t wobble on cuts. Get rid of the death tax and the alternative minimum tax. And President Trump is right; we must continue to allow Americans to contribute fully to 401K retirement accounts.

Why is there no discussion of reducing the capital gains levy? After all every time that rate has been reduced, revenues go up immediately. This is a great twofer: more investment and more revenue.

Our new tax structure should double the standard personal deduction, a move that would boost approval ratings for Republicans if presented with the right messaging – your first $25,000 in income is tax-free! They should also reduce the Social Security tax by 3 points, giving everyone an immediate benefit. (We did a temporary 2 point cut, after all, under Barack Obama, the “cost” of which for Social Security revenue was made up by transfer from the federal budget.)  Even people making less than $1,000 a month would receive an additional few hundred dollars a year, a significant amount for them.

Stop taking things away from people; give them something. This way everyone sees their paychecks go up even if they don’t pay federal income tax.

All of the cuts should be immediate, and then some. Make the changes retroactive to January 1, 2017, ensuring working Americans of a fat refund check in April. For Republicans worried about their chances of reelection in 2018, that would send voters to the polls with good feelings about the service they are receiving from their elected leaders. Lincoln said nothing can fail with public sentiment and nothing can succeed without it. Letting Americans keep more of the money they have earned will build positive public sentiment in a hurry.

These dramatic reductions would boost economic growth to 4 percent or higher. Contrary to the CBO and to root canal, eye shade Republicans, federal revenue growth would easily eliminate the federal deficit within 10 years.

Tax reform is by nature a matter of percentages, rates and dollar amounts. But it’s also very much a philosophical and cultural battle. For the Republican Party, this is an opportunity to define itself in the image of Reagan and Kemp and their other predecessors who chose growth and opportunity over the redistribution of wealth and expansion of a welfare state supported by taxing the rich and middle class.

It is time to make that choice; the window of opportunity is closing. Big tax cuts must be accomplished by the end of the year. Republicans – and any Democrats who would truly like to see their constituents lead better lives – should rid us of anti-capital tax policies and return America to a place that rewards hard work and entrepreneurism.

Jesse Jackson called capitalism without capital just another ism. We don’t need another ism; we need a massive injection of capital and the economic boom it will bring about. Bold tax cuts will make that happen.