I’m listening to the Donald talk to a crowd in Fletcher, NC and he’s repeating the usual litany of tax cuts and such to revive American business. I thought I’d take out my economics 101 text and provide a few thoughts:
- If you cut tax rates on average from 35% to 15%, that’s almost a 2/3 reduction. Now, businessemen will pay some of this to themselves, but most of it will the reinvested in plant and equipment. Right now, the only way businesses have of reducing taxes is to invest in depreciable assets, which is good, but it misses the labor part of the equation.
- It’s been said that American workers can compete with anyone in the world, given some productivity improvements, so here’s the chance. Economists say it would work.
- On trade, we have to level the playing field, and Mexico and China have to reduce their tariffs on admitting American exports. This is Trump’s negotiating point….you reduce your tariffs to our import levels (currently about 3%) and all is good. NAFTA hasn’t really worked to do the reduction that it promised, and the TPP as written doesn’t deliver, either. Both have to be renegotiated so they’re fair. This is what Donald means (he can be a little obtuse at times).
- Clearly, hiring will pick up, and the baristas making $8.05 and hour will have a shot at better wages. Should free up the labor markets, and get rid of underemployment, which is a big problem (no one really knows how big).
So, give the Donald your support and encourage your friends and associates to do so.
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