Episode Transcript
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Speaker 1 (00:00):
Let's nerd out a little bit together with some econ.
Speaker 2 (00:03):
My listeners know I'm an econ nerd, and some of
my favorite economists over.
Speaker 1 (00:08):
Many years now.
Speaker 2 (00:10):
Going all the way back at least to Dan Mitchell
at the Cato Institute, have been folks at the Cato Institute.
So I am super happy to be joined right now
by Adam Michelle, who is Director of Tax Policy Studies
at the Cato Institute Cato dot org. And I note,
just for purposes of context for the conversation, he also
(00:30):
was the deputy staff director at the Joint Economic Committee
of Congress, so he understands the intersection of politics and
economics and we're going to talk about all of that today. Hi, Adam,
Welcome to KAOA. It's good to see you.
Speaker 3 (00:45):
Thanks for having me on. A pleasure to be here.
Speaker 2 (00:48):
So first let's I want to talk sort of big
picture political economy. Then I want to narrow in a
little bit on the corporate tax rate, and then we'll
do a couple other things. But one of the major
accomplishments of Donald Trump's first term was the Tax Cutting
Jobs Act, and it includes lots of different provisions, and
(01:09):
some of them, including the personal income tax rates will
expire soon if not extended. So on a first of all,
on a policy basis, before we get to the politics,
how should we think about or what do we need
to know about what would change if Congress does nothing.
Speaker 3 (01:29):
Yeah, that's the sort of fundamental question that's head of
Congress this session. The twenty seventeen tax cuts almost entirely expire. Basically,
everything other than the corporate tax rate change will expire,
which leads to about a four hundred billion dollars a
year tax increase on the American economy, amounting to several
(01:51):
thousand dollars tax increase per American family. And that's if
Congress does nothing. It's unlikely they will do nothing. The
Republicans are very focus on extending and expanding those tax cuts,
but it will be difficult with slim majorities, and there's
lots of sticking points. So what that ultimate reform at
the end of the year looks like is still up
(02:13):
in the air. But the hope is that they make
what they got in twenty seventeen permanent and expand on
those tax cuts, making them even more pro growth by
not just keeping tax rates low, but also constraining the
growth of government, which is ultimately where the tax revenue
is going.
Speaker 2 (02:29):
Okay, so you're already drifting into politics there, so I'm
going to go there with you. So I'm old enough
to remember, and you're younger than I am, but you're
still old enough to remember that when the Trump tax
cuts passed in was it twenty seventeen?
Speaker 1 (02:46):
I think.
Speaker 2 (02:48):
The New York Times and all the people like that
told us that only billion only millionaires and billionaires. To
channel my inner Bernie Sanders, we're getting tax cuts vctually.
The New York Times actually wrote a piece with a
hilarious title saying, face it, you probably got a tax cut.
(03:09):
Like they didn't want to admit it. But how is
this going to play out? Where for years Democrats have
been telling us the Trump tax cuts only went to
the rich, which is a lie because now if they
block a deal, then their middle class constituents are gonna
(03:29):
get a huge tax sit.
Speaker 3 (03:32):
Yeah, that's a a great summary. There was this myth
perpetrated by the left that the twenty seventeen tax cuts
were just for rich people and corporations. Republicans actually went
to great lengths to make the tax cuts for Americans
in every income group. About something like ninety eight plus
(03:53):
percent of Americans got a tax cut or saw no
change at all, And the largest tax cuts, as a
share of tax is paid, went to the lowest income Americans,
not the highest income Americans. Of course, if you're cutting
everyone's tax rates, the rich pay the lion's share of
income taxes in the first place. The top ten percent
of income earners pay something like seventy percent of income taxes.
(04:17):
So of course, if you're cutting taxes for everyone, the
rich are also getting tax cuts. But that was by
no means the thrust of this reform. And if you
look at what Biben was proposing, he was proposing maintaining
a majority of the of the Trump tax cuts by
saying you only wanted to increase taxes on people earning
over four hundred thousand dollars a year, sort of implicitly
(04:40):
acknowledging that most of the tax cuts did indeed go
to people below that mark.
Speaker 2 (04:45):
I will note to listeners just to add on to
what Adam just said, that the top one percent of
earners pay more in federal income tax than the bottom
ninety five percent of earners. That is not a mistake.
What I just is not. I was not an error.
I didn't say it wrong. The top one percent pay
(05:06):
more than the bottom ninety five percent, So.
Speaker 1 (05:09):
Keep that in mind. As I often say on.
Speaker 2 (05:11):
This show, Democrats are absolutely right that our tax system
is unfair. It's just unfair in exactly the opposite direction
from the way they claim. It is way too tilted
towards soaking the rich, which is not really where.
Speaker 1 (05:26):
All the money is. So what do you expect then?
What do you.
Speaker 2 (05:31):
Expect adam on the tax extensions and what I want
you to get into here a little bit. Also is
this state and local tax limitation, the salt deduction. So
you've got Republicans in blue states who want taxpayers in
other states to subsidize their high state taxes, and Trump
(05:55):
mostly Trump limited that to ten thousand dollars a year.
Now you got people like Mike Lawler in New Yar
York saying you won't.
Speaker 1 (06:00):
Vote for the bill unless that gets raised.
Speaker 3 (06:03):
Yeah. So one of the reforms in the Tax Cuts
and Jobs Act, which was both a tax cut and
a tax reform, was a limit on the ability to
deduct state and local taxes. And this is essentially just
a subsidy as you're saying to high tax rich people
in high tax states, they can Politicians in California will say,
don't worry, we'll raise taxes. You can just write it
(06:25):
off against your federal tax return. And this is an
implicit subsidy to bad fiscal policy in places like California,
New York, and New Jersey. But what's often not understood
by people in these places is they still got a
tax cut. We limited the salt deduction, but their rates
went down, the standard deduction went up, and a second
(06:45):
what's called the alternative minimum tax, was also made less restrictive,
hitting significantly fewer Americans. And so the ten thousand dollars
cap was the political compromise in twenty seventeen. The right
answer was zero, we should be writing off no state
local taxes, and these folks from these high tax states
got a ten thousand dollars deduction. Now they're going back
(07:07):
on that, on that compromise and trying to extract even
more of a subsidy from places like Texas, Colorado, Florida
and the rest of it.
Speaker 2 (07:19):
But how do you think it will play out if
you've got blue state Republicans might like Mike Lawler saying
they won't vote to extend the tax rate cuts and
this other stuff unless they get an increase in the
salt deduction. And at the same time, you have Chip
Roy and some Freedom Caucus people saying they won't vote
for the bill if it does that.
Speaker 3 (07:39):
And all of this is in the context of the
House where Republicans have just a couple seat majority, so
any one member theoretic, any several members could theoretically, if
they band together, take down.
Speaker 1 (07:51):
The whole bill.
Speaker 3 (07:52):
I think this tug of war will be really interesting.
I suspect that the Salt Caucus as they're called, will
get some in and the deduction, but it will have
to be paired with other changes to the point of
the deficit hawks. It will have to come with spending
cuts or other changes to other portions of the tax
(08:13):
code so that the deficit doesn't continue to explode.
Speaker 2 (08:16):
We're talking with Adam Michelle, who directs tax policy studies
at the Cato Institute c Ato dot org, the premier
libertarian organization in the country or the world.
Speaker 1 (08:26):
So you just mentioned spending cuts.
Speaker 2 (08:29):
And you know, one of my favorite lessons of Milton
Friedman is is that you measure the burden of government
by spending, not by deficit, right, because the government can
spend an immense amount and if they just raise taxes enough,
then the deficit could be small. But that doesn't mean
the burden of government is small, right, just to ask
the Europeans.
Speaker 1 (08:47):
So Donald Trump has never seemed very interested.
Speaker 2 (08:52):
In spending cuts, and that was his biggest domestic policy
failure in my opinion, is he doesn't care and he's
not willing to address entitlements. So if you've got a
leader of the Republican Party who I don't want to
say he's quite as bad as a Democrat on spending,
(09:14):
but he's not as good as a Republican should be,
how are we going to make any progress since the
other cowardly Republicans will just hide behind his skirts.
Speaker 3 (09:22):
Well, I'm a little bit more optimistic this time around.
He's empowered Elon Musk with the Doge Commission, which is
at least shining more light on this issue of sort
of runaway government spending inefficiencies blow but also also just
the fact that we spend way too much money. I
think it's an open question how actually committed Trump is
(09:45):
to any cuts that ultimately come out of that process.
But there are Republicans in the House who will have
power in this discussion who do care about the size
of government as measured by the sort of deficit, a
difference between what we're bringing in and what's going out
the door. So these members, if they have a spine
(10:08):
and they stick to their and they stick to their guns,
can extract significant spending cuts as part of this broader
fiscal discussion that will happen in twenty twenty five. My
colleague Chris Edwards and I have put together several different lists,
one of which details more than four trillion dollars of
spending cuts that are eligible to be used in the
(10:29):
process that they'll use to pass tax cuts that should
be it should fit within the priorities of a Trump presidency.
So this is eminently doable. It's just a matter, as
you said, of the sort of political will to get
it across the finish line.
Speaker 2 (10:44):
Well, you know what comes to mind when you describe
it that way, And I think you're right. I'm somewhat
optimistic that Trump will be better this time. But in
a way, when you're negotiating with Trump, it's kind of
like negotiating with a Republican and a Democrat at the
same time. After all, he's a populist. He's not really
a conservative. He's not a libertarian, he's not a liberal.
Speaker 1 (11:06):
He's a populist with very few fixed principles.
Speaker 2 (11:09):
So but if he cares a lot about tax cuts,
then it might be as you say that conservative Republicans
have a little bit of negotiating leverage with him, and
Elon Musk will be in his ear too, saying, all right,
if we're going to pass this whole package, it's got
to be more or less balanced or better than balanced.
Speaker 1 (11:32):
It's got to be a net positive over ten years.
Speaker 2 (11:34):
And the only way you can do that with the
tax cuts that we all want is.
Speaker 1 (11:38):
To also cut spending.
Speaker 2 (11:40):
And I don't think they're going to get into entitlements
this time around.
Speaker 1 (11:44):
I don't think they have the courage. But maybe maybe
Trump will do something. I don't know.
Speaker 3 (11:50):
His first term budget did have some reforms to some
medical Medicare medical programs like Medicare Medicaid. It reformed how
the payments worked and ultimately would be a benefit for
the deficit. So I think there is opportunity there as well.
But you're right, Trump, he not only does he not
(12:12):
really believe in his bones that I think that we
need to be reducing the total size and scope of government,
but he also, I think, cares about what markets think.
And if they pass a five plus trillion dollar reduction
in revenue without touching the spending side, or even increasing
it further, if they do more defense spending or border spending,
(12:34):
then I think markets will will ultimately have something to
say about that. We can't continue to add to the
deficit like we are the debt as we are with
high deficits in perpetuity. Something has to break eventually, and
so I think that that could be a forcing mechanism
as well.
Speaker 1 (12:51):
All right, last quick thing for you, Adam.
Speaker 2 (12:53):
You wrote a piece recently for the Cato Institute entitled
the Case for Trump's fifth fifteen percent corporate tax rate.
Speaker 1 (13:01):
And this is a thing Trump has mentioned more.
Speaker 2 (13:04):
Than once, not necessarily every day, but more than once
on the campaign trail, like how proud he is of
cutting the corporate tax rate, and that he thinks there's
room for it to go down further. I think you
and I agree that the proper corporate tax rate is zero.
That's not going to happen at least not right now.
But what's the argument, both economic and especially political, to
(13:25):
make in favor of cutting the corporate rate even further?
Speaker 3 (13:28):
Yeah, so this was Trump's ask all the way back
to twenty sixteen, before the first round of tax cuts.
He's always wanted a fifteen percent rate. They got it
down to twenty one last time. He's just continuing that
original campaign promise. If you look around the world or
other sort of big trading partners across sort of Europe
have been lowering their corporate tax rates as well, and
(13:49):
revenue actually hasn't been declining. Because corporate taxes are so
economically destructive. They reduce business activity, They make it harder
to hire, raise wages, invest in come countries. Ireland, for example,
cut their corporate tax rate from about forty percent to
twelve and a half and saw revenue increase by about
seventy five percent over the following years. Following the twenty
(14:14):
seventeen tax cuts. In the US, we also saw corporate
tax revenue rise in the last couple of years. So
the fiscal hit of reforms to really economically destructive taxes
like corporate taxes is not as large as people think
it can. Even be positive, and so I think this
is a really good addition to what they're talking about
(14:35):
this year, not just making the tax cuts permanent, but
expanding them, making them more pro growth, because ultimately growth
makes it even easier to address the sort of spending
problems that we've been talking about.
Speaker 2 (14:48):
Well, there's a lot to do, there's a lot of
controversy and disagreement even among Republicans, and so I think
we can all just grab the popcorn, sit back, and
see what happens, and hope our taxes don't go up.
Adam Michelle is director of Tax Policy Studies at the
Cato Institute Gato dot org.
Speaker 1 (15:06):
It's good to talk to you, Adam. Thanks for being here.
We'll do it again.
Speaker 3 (15:09):
Thanks for having me on.
Speaker 1 (15:10):
Glad to do it.
Let's nerd out a little bit together with some econ.
Speaker 2 (00:03):
My listeners know I'm an econ nerd, and some of
my favorite economists over.
Speaker 1 (00:08):
Many years now.
Speaker 2 (00:10):
Going all the way back at least to Dan Mitchell
at the Cato Institute, have been folks at the Cato Institute.
So I am super happy to be joined right now
by Adam Michelle, who is Director of Tax Policy Studies
at the Cato Institute Cato dot org. And I note,
just for purposes of context for the conversation, he also
(00:30):
was the deputy staff director at the Joint Economic Committee
of Congress, so he understands the intersection of politics and
economics and we're going to talk about all of that today. Hi, Adam,
Welcome to KAOA. It's good to see you.
Speaker 3 (00:45):
Thanks for having me on. A pleasure to be here.
Speaker 2 (00:48):
So first let's I want to talk sort of big
picture political economy. Then I want to narrow in a
little bit on the corporate tax rate, and then we'll
do a couple other things. But one of the major
accomplishments of Donald Trump's first term was the Tax Cutting
Jobs Act, and it includes lots of different provisions, and
(01:09):
some of them, including the personal income tax rates will
expire soon if not extended. So on a first of all,
on a policy basis, before we get to the politics,
how should we think about or what do we need
to know about what would change if Congress does nothing.
Speaker 3 (01:29):
Yeah, that's the sort of fundamental question that's head of
Congress this session. The twenty seventeen tax cuts almost entirely expire. Basically,
everything other than the corporate tax rate change will expire,
which leads to about a four hundred billion dollars a
year tax increase on the American economy, amounting to several
(01:51):
thousand dollars tax increase per American family. And that's if
Congress does nothing. It's unlikely they will do nothing. The
Republicans are very focus on extending and expanding those tax cuts,
but it will be difficult with slim majorities, and there's
lots of sticking points. So what that ultimate reform at
the end of the year looks like is still up
(02:13):
in the air. But the hope is that they make
what they got in twenty seventeen permanent and expand on
those tax cuts, making them even more pro growth by
not just keeping tax rates low, but also constraining the
growth of government, which is ultimately where the tax revenue
is going.
Speaker 2 (02:29):
Okay, so you're already drifting into politics there, so I'm
going to go there with you. So I'm old enough
to remember, and you're younger than I am, but you're
still old enough to remember that when the Trump tax
cuts passed in was it twenty seventeen?
Speaker 1 (02:46):
I think.
Speaker 2 (02:48):
The New York Times and all the people like that
told us that only billion only millionaires and billionaires. To
channel my inner Bernie Sanders, we're getting tax cuts vctually.
The New York Times actually wrote a piece with a
hilarious title saying, face it, you probably got a tax cut.
(03:09):
Like they didn't want to admit it. But how is
this going to play out? Where for years Democrats have
been telling us the Trump tax cuts only went to
the rich, which is a lie because now if they
block a deal, then their middle class constituents are gonna
(03:29):
get a huge tax sit.
Speaker 3 (03:32):
Yeah, that's a a great summary. There was this myth
perpetrated by the left that the twenty seventeen tax cuts
were just for rich people and corporations. Republicans actually went
to great lengths to make the tax cuts for Americans
in every income group. About something like ninety eight plus
(03:53):
percent of Americans got a tax cut or saw no
change at all, And the largest tax cuts, as a
share of tax is paid, went to the lowest income Americans,
not the highest income Americans. Of course, if you're cutting
everyone's tax rates, the rich pay the lion's share of
income taxes in the first place. The top ten percent
of income earners pay something like seventy percent of income taxes.
(04:17):
So of course, if you're cutting taxes for everyone, the
rich are also getting tax cuts. But that was by
no means the thrust of this reform. And if you
look at what Biben was proposing, he was proposing maintaining
a majority of the of the Trump tax cuts by
saying you only wanted to increase taxes on people earning
over four hundred thousand dollars a year, sort of implicitly
(04:40):
acknowledging that most of the tax cuts did indeed go
to people below that mark.
Speaker 2 (04:45):
I will note to listeners just to add on to
what Adam just said, that the top one percent of
earners pay more in federal income tax than the bottom
ninety five percent of earners. That is not a mistake.
What I just is not. I was not an error.
I didn't say it wrong. The top one percent pay
(05:06):
more than the bottom ninety five percent, So.
Speaker 1 (05:09):
Keep that in mind. As I often say on.
Speaker 2 (05:11):
This show, Democrats are absolutely right that our tax system
is unfair. It's just unfair in exactly the opposite direction
from the way they claim. It is way too tilted
towards soaking the rich, which is not really where.
Speaker 1 (05:26):
All the money is. So what do you expect then?
What do you.
Speaker 2 (05:31):
Expect adam on the tax extensions and what I want
you to get into here a little bit. Also is
this state and local tax limitation, the salt deduction. So
you've got Republicans in blue states who want taxpayers in
other states to subsidize their high state taxes, and Trump
(05:55):
mostly Trump limited that to ten thousand dollars a year.
Now you got people like Mike Lawler in New Yar
York saying you won't.
Speaker 1 (06:00):
Vote for the bill unless that gets raised.
Speaker 3 (06:03):
Yeah. So one of the reforms in the Tax Cuts
and Jobs Act, which was both a tax cut and
a tax reform, was a limit on the ability to
deduct state and local taxes. And this is essentially just
a subsidy as you're saying to high tax rich people
in high tax states, they can Politicians in California will say,
don't worry, we'll raise taxes. You can just write it
(06:25):
off against your federal tax return. And this is an
implicit subsidy to bad fiscal policy in places like California,
New York, and New Jersey. But what's often not understood
by people in these places is they still got a
tax cut. We limited the salt deduction, but their rates
went down, the standard deduction went up, and a second
(06:45):
what's called the alternative minimum tax, was also made less restrictive,
hitting significantly fewer Americans. And so the ten thousand dollars
cap was the political compromise in twenty seventeen. The right
answer was zero, we should be writing off no state
local taxes, and these folks from these high tax states
got a ten thousand dollars deduction. Now they're going back
(07:07):
on that, on that compromise and trying to extract even
more of a subsidy from places like Texas, Colorado, Florida
and the rest of it.
Speaker 2 (07:19):
But how do you think it will play out if
you've got blue state Republicans might like Mike Lawler saying
they won't vote to extend the tax rate cuts and
this other stuff unless they get an increase in the
salt deduction. And at the same time, you have Chip
Roy and some Freedom Caucus people saying they won't vote
for the bill if it does that.
Speaker 3 (07:39):
And all of this is in the context of the
House where Republicans have just a couple seat majority, so
any one member theoretic, any several members could theoretically, if
they band together, take down.
Speaker 1 (07:51):
The whole bill.
Speaker 3 (07:52):
I think this tug of war will be really interesting.
I suspect that the Salt Caucus as they're called, will
get some in and the deduction, but it will have
to be paired with other changes to the point of
the deficit hawks. It will have to come with spending
cuts or other changes to other portions of the tax
(08:13):
code so that the deficit doesn't continue to explode.
Speaker 2 (08:16):
We're talking with Adam Michelle, who directs tax policy studies
at the Cato Institute c Ato dot org, the premier
libertarian organization in the country or the world.
Speaker 1 (08:26):
So you just mentioned spending cuts.
Speaker 2 (08:29):
And you know, one of my favorite lessons of Milton
Friedman is is that you measure the burden of government
by spending, not by deficit, right, because the government can
spend an immense amount and if they just raise taxes enough,
then the deficit could be small. But that doesn't mean
the burden of government is small, right, just to ask
the Europeans.
Speaker 1 (08:47):
So Donald Trump has never seemed very interested.
Speaker 2 (08:52):
In spending cuts, and that was his biggest domestic policy
failure in my opinion, is he doesn't care and he's
not willing to address entitlements. So if you've got a
leader of the Republican Party who I don't want to
say he's quite as bad as a Democrat on spending,
(09:14):
but he's not as good as a Republican should be,
how are we going to make any progress since the
other cowardly Republicans will just hide behind his skirts.
Speaker 3 (09:22):
Well, I'm a little bit more optimistic this time around.
He's empowered Elon Musk with the Doge Commission, which is
at least shining more light on this issue of sort
of runaway government spending inefficiencies blow but also also just
the fact that we spend way too much money. I
think it's an open question how actually committed Trump is
(09:45):
to any cuts that ultimately come out of that process.
But there are Republicans in the House who will have
power in this discussion who do care about the size
of government as measured by the sort of deficit, a
difference between what we're bringing in and what's going out
the door. So these members, if they have a spine
(10:08):
and they stick to their and they stick to their guns,
can extract significant spending cuts as part of this broader
fiscal discussion that will happen in twenty twenty five. My
colleague Chris Edwards and I have put together several different lists,
one of which details more than four trillion dollars of
spending cuts that are eligible to be used in the
(10:29):
process that they'll use to pass tax cuts that should
be it should fit within the priorities of a Trump presidency.
So this is eminently doable. It's just a matter, as
you said, of the sort of political will to get
it across the finish line.
Speaker 2 (10:44):
Well, you know what comes to mind when you describe
it that way, And I think you're right. I'm somewhat
optimistic that Trump will be better this time. But in
a way, when you're negotiating with Trump, it's kind of
like negotiating with a Republican and a Democrat at the
same time. After all, he's a populist. He's not really
a conservative. He's not a libertarian, he's not a liberal.
Speaker 1 (11:06):
He's a populist with very few fixed principles.
Speaker 2 (11:09):
So but if he cares a lot about tax cuts,
then it might be as you say that conservative Republicans
have a little bit of negotiating leverage with him, and
Elon Musk will be in his ear too, saying, all right,
if we're going to pass this whole package, it's got
to be more or less balanced or better than balanced.
Speaker 1 (11:32):
It's got to be a net positive over ten years.
Speaker 2 (11:34):
And the only way you can do that with the
tax cuts that we all want is.
Speaker 1 (11:38):
To also cut spending.
Speaker 2 (11:40):
And I don't think they're going to get into entitlements
this time around.
Speaker 1 (11:44):
I don't think they have the courage. But maybe maybe
Trump will do something. I don't know.
Speaker 3 (11:50):
His first term budget did have some reforms to some
medical Medicare medical programs like Medicare Medicaid. It reformed how
the payments worked and ultimately would be a benefit for
the deficit. So I think there is opportunity there as well.
But you're right, Trump, he not only does he not
(12:12):
really believe in his bones that I think that we
need to be reducing the total size and scope of government,
but he also, I think, cares about what markets think.
And if they pass a five plus trillion dollar reduction
in revenue without touching the spending side, or even increasing
it further, if they do more defense spending or border spending,
(12:34):
then I think markets will will ultimately have something to
say about that. We can't continue to add to the
deficit like we are the debt as we are with
high deficits in perpetuity. Something has to break eventually, and
so I think that that could be a forcing mechanism
as well.
Speaker 1 (12:51):
All right, last quick thing for you, Adam.
Speaker 2 (12:53):
You wrote a piece recently for the Cato Institute entitled
the Case for Trump's fifth fifteen percent corporate tax rate.
Speaker 1 (13:01):
And this is a thing Trump has mentioned more.
Speaker 2 (13:04):
Than once, not necessarily every day, but more than once
on the campaign trail, like how proud he is of
cutting the corporate tax rate, and that he thinks there's
room for it to go down further. I think you
and I agree that the proper corporate tax rate is zero.
That's not going to happen at least not right now.
But what's the argument, both economic and especially political, to
(13:25):
make in favor of cutting the corporate rate even further?
Speaker 3 (13:28):
Yeah, so this was Trump's ask all the way back
to twenty sixteen, before the first round of tax cuts.
He's always wanted a fifteen percent rate. They got it
down to twenty one last time. He's just continuing that
original campaign promise. If you look around the world or
other sort of big trading partners across sort of Europe
have been lowering their corporate tax rates as well, and
(13:49):
revenue actually hasn't been declining. Because corporate taxes are so
economically destructive. They reduce business activity, They make it harder
to hire, raise wages, invest in come countries. Ireland, for example,
cut their corporate tax rate from about forty percent to
twelve and a half and saw revenue increase by about
seventy five percent over the following years. Following the twenty
(14:14):
seventeen tax cuts. In the US, we also saw corporate
tax revenue rise in the last couple of years. So
the fiscal hit of reforms to really economically destructive taxes
like corporate taxes is not as large as people think
it can. Even be positive, and so I think this
is a really good addition to what they're talking about
(14:35):
this year, not just making the tax cuts permanent, but
expanding them, making them more pro growth, because ultimately growth
makes it even easier to address the sort of spending
problems that we've been talking about.
Speaker 2 (14:48):
Well, there's a lot to do, there's a lot of
controversy and disagreement even among Republicans, and so I think
we can all just grab the popcorn, sit back, and
see what happens, and hope our taxes don't go up.
Adam Michelle is director of Tax Policy Studies at the
Cato Institute Gato dot org.
Speaker 1 (15:06):
It's good to talk to you, Adam. Thanks for being here.
We'll do it again.
Speaker 3 (15:09):
Thanks for having me on.
Speaker 1 (15:10):
Glad to do it.
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