I & I Editorial BoardPresident Donald Trump’s promise to send a $5,000 dividend to every American adult if the Republicans retain their congressional majority has kicked up a lot of bipartisan dust, as it should have. Vowing to both cut federal income tax rates sharply and fully overhaul Washington’s revenue-collecting system would have been a far better proposal, both politically and economically.
Handing every grownup in the country five grand would likely cost more than $1.2 trillion. What’s more, doing so wouldn’t be particularly stimulative and would likely worsen inflation. To grow the economy, we need tax cuts.
Now we’ve seen the reports that Commerce Secretary Howard Lutnick says the dividend will not be paid from tax revenues but from other sources. Even if that were the case, we’re still not sold on the idea. A one-time windfall would not have the dynamic impact that bold income tax rate cuts would generate.
History shows that income tax cuts boost economic growth, creating the “rising tide” that President John F. Kennedy said “lifts all the boats.” Income tax reductions fueled growth in the 1920s, the 1960s and the 1980s.
Cutting income taxes is, of course, difficult. Democrats don’t want Americans to keep more of the dollars they earn because tax money finances their lust for political power and their wealth redistribution schemes. It’s a drug they can’t quit. Even more difficult, though, would be restructuring the nation’s tax system. The bulk of the revenues land in Washington via the income tax, and its convoluted web of rewards and punishments — the mortgage interest deduction, the earned income tax credit, and the marriage penalty, to name a few — empowers lawmakers on both sides because they have constituencies that want to keep those tax code quirks in place.
But it’s a miserable arrangement. The income tax is inefficient, harms productivity, invites abuse from IRS agents, requires Americans to engage in busy work that saps their labor output and drains them of leisure time. The income tax is a direct assault on liberty — a truly free man does not have to provide to government the means it will use to strip him of his earnings and his privacy.
We’d prefer a national sales or consumption tax to replace the federal income tax, though we understand the perverse politics that stand in the way. A flat-rate income tax, with no deductions or adjustments, while not ideal, would still be a vast improvement over the current burden that constantly stalks every productive American. The Trump administration ought to make deep rate cuts and true tax reform a top issue over the last two months of the midterm campaign season, not a once-in-a-lifetime jackpot that will have no lasting effect.
— Written by the I&I Editorial Board
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Why doesn’t President Trump and his Administration believe that the $5000 will do the same thing as the $2000 that the Biden pander did during the Covid crisis.
We ended up with inflation nearly 10%; everything became less affordable. It’s obvious Trump is doing this because he is worried about the midterms.
Is this worth it? What happened to principled government? It will be almost funny to hear the Democrats in Congress squealing about this bribe when Biden did the exact same thing (at a discount yet) amid a chorus of Democratic paeons.
This can be entirely paid for with tariffs IF the congress approves them. Hence the requirement to keep congress Republican.
Why this is not mentioned in the article eludes me. It seems very central to the issue and disingenuous to leave out.
We have needed to hike our tariffs for over half a century. Thank God someone is finally suggesting it.
I’m a little confused. Are you proposing that the $1.2 trillion in rebate checks be paid for by raising taxes on imports by $1.2 trillion — costs that will mostly be paid by consumers? Seems a bit like robbing Peter to pay Peter.
As an addition to Mr. Merline’s reply, assuming the $1.2 Trillion is from tariffs, I believe a new bureaucracy would have to be formed to distribute the $5000 to each adult.
This would be in addition to the increase in tariff prices of the consumer goods.
Trump’s MO is to keep his opponents off balance, this proposal is another example. Congress must approve the disbursement of funds, which every Democrat will oppose showing yet again that the left doesn’t support American citizens.
In this case, the Democrats would be principled when they oppose this giveaway.
How does getting us deeper in debt ‘support American citizens?’
I can’t imagine a less responsible thing to do. Remember when we laughed about the ridiculousness of Obamaphones. Well here we are. You can’t be a conservative and throw money around – we don’t have the money and it’s long past time to quit tossing the futures of all young Americans in the trash by loading them with a debt they can’t possibly pay.
One of the best ways to get the economy going and make it more affordable for people in the United States is to cut the income Tax for everyone
Here’s an idea, how about the dividend check AND tax cits???
It would be nice to get tax reform, but the top 1% went from 10% of GDP to 23% now. Giving everyone who earns under 200,000 a $5,000 tax credit sounds great to me. Fund it with Tariffs and a 40% tax (now at 39%) on the top 1%.
We need to increase tariffs to the level we are paying tariffs just to even things out. This would more than pay for the $5000 and a lot more.
Hey, we’ve seen this before: “We need tax cuts, followed by adjustments to the revenue stream.”
Of course, by no we know that changes to the revenue stream never happen. We’re $40 trillion in debt, and cutting taxes is NOT the anwer.
I think trumps angle is this: He and we know that it isn’t possible. Yet the socialists & progressives, et cetera, have no idea that it isn’t possible. With the impossible proposal, he may peel off just enough lo-fo DSA types who yearn for free money from the government to make the difference in the fall. Every little bit helps!
Here is what we know..
President Trump ran on “I’ll build the wall and have Mexico pay for it” how’s that going?I won’ get us in to another war:) We will remove illegal aliens.The rate at which they’re removing alien trespassers will take over 100 years to reach their goal.I’ll get gas to $2.25 a gallon.The government has already transferred more than a trillion dollars from the middle class by taking away the penny.You still have voter fraud.We never resolved the Epstein case.Hiding Mitch McConnell no proof of life before midterms.This just goes on and on and on.I had high hopes for him in the beginning but the list just keeps growing.P.S
It would be nice to get a $5,000 check but you’ll probably end just paying it back in taxes…..
In an election where you media folks are telling all us rubes that we can only vote AGAINST stuff, it nice to have someone give me something to vote FOR.
But, I admire your nobility. When you and another million people (out of 280 million) send your $5,000 to the fund that pays down the debt, that’s $5 billion.
Pair that with a Republican Congress that passes a budget just 1% lower than last year and you have something!
$5000 (10,000 to 2 partner families) would be more than a windfall to the half of America who earn below the median income. In a way lower tax rates cannot do. It can buy time to deploy systemic fixes Congress has so far ignored. Trump’s tactics are debatable but his grasp of essentials is genius.