Tax reform is the one legislative victory Republicans must have if they are to hold the House and pick up five to seven Senate seats in November 2018. And tax reform is also the one legislative victory that looks increasingly likely.
Tax reform is a must-win for two reasons. First, to kick-start strong economic growth and job creation. Second, to demonstrate that President Trump and the Republicans in Congress can "get things done."
If there had not been a zillion shiny things and tweets distracting us, it should have been obvious last year that America would not elect a Democrat to the presidency for the third time, as a result of the failed economic policies of President Obama and congressional Democrats.
The Democratic failures include higher taxes on everyone, (including eight ObamaCare taxes directly on the middle class), an explosion of regulatory costs, a new unending entitlement and lousy job numbers.
Passing tax reform without a single Democratic vote will remind Americans that there are two teams in Washington. One works for government and the other works for them. Democrats refer to tax hikes as income. Republicans know taxes are a cost imposed on American families. Pick your team.
Even coming out of a deep recession, the Obama administration averaged growth of only 2 percent a year. President Reagan battled recession and inflation and managed 4 percent growth, creating 4 million jobs in the first year of his recovery.
In the 2016 election, Hillary Clinton promised $1 trillion in even higher taxes. She said she would not reduce tax rates for anyone and for any business, and hinted at other new and different taxes yet to come.
Donald Trump was elected president because he promised jobs, jobs, jobs. He and the GOP Congress know they have to deliver in such a way that even MSNBC will have to note from time to time that in the first six months of 2018 the economy is in fact demonstrably stronger.
The good news is that the emerging tax reform and reduction legislation will deliver a strong boost to the creation of jobs, income and wealth. The federal tax on businesses will be reduced from 35 percent (fourth-highest in the world), to roughly 20 percent, just below the developed world average. China is at 25 percent.
Long depreciation schedules will be replaced by full and immediate business expensing – at least for a few years. And history suggests that any such pro-growth measure will be extended again and again (just as the research and development tax credit was) and eventually be made permanent.
Today there are $2.6 trillion earned by American companies overseas and stuck there because of stupid federal tax policy. Tax reform will bring those dollars back in a cascade of real investment in America. President Obama's "stimulus" was run through congressional earmarks and city politicians. It left no noticeable permanent job gains.
The biggest winners of tax reform will be the millions of Americans who enter or return to the job market when we unleash America's business investment through lower taxes, expensing and repatriation.
Middle-income Americans will also see their personal tax rates fall and the standard deduction for an individual will jump from $6,000 to $12,000, and for a married couple from $12,000 to $24,000. Good luck to the Democrats explaining to millions of middle-class Americans who will see pay raises from these changes that they just benefit "the rich."
Finally, passing tax reform without a single Democratic vote will remind Americans that there are two teams in Washington. One works for government and the other works for them. Democrats refer to tax hikes as income. Republicans know taxes are a cost imposed on American families. Pick your team.
The Republican plan had been to pass ObamaCare repeal and reform, and then move on to tax reform and reduction – and run on those two victories. That may or may not happen.
ObamaCare repeal may fail if three Republican senators put their personal pique and desire for approbation by the media ahead of their constituents, who are damaged by ObamaCare's ever-higher premiums and the 20 ObamaCare taxes.
Republicans must plan on asking Americans to judge them in 2018 on one big victory, not the expected two. Every Republican member of Congress knows that for policy and political reasons, the tax reform and reduction bill this fall will have to be as large, deep and pro-growth as possible.