Why a soak-the-rich tax hike is a disaster — for the economy and for Trump

As longtime advocates for pro-growth economical policies, we constitute to counsel President Donald Trump against immoderate taxation connection that would raise nan apical individual income-tax complaint beyond its existent level of 37%.

Recent rumors of an increase to 40% aliases much would correspond a vulnerable departure from nan proven, prosperity-driving principles that person boosted America ever since nan Reagan years: That is, lowering taxation rates to beforehand economical prosperity. 

History has shown clip and again that reducing marginal taxation rates — peculiarly connected individuals, entrepreneurs and mini businesses — unleashes economical growth, expands nan taxation guidelines and yet generates more authorities revenue, not less.

Raising taxation rates, connected nan different hand, astir ever has nan aforesaid 3 consequences: little gross than expected, slower economical maturation and reduced income taxes paid by nan rich | — arsenic higher-income filers prosecute accountants to return advantage of loopholes and debar those higher rates.

From President John F. Kennedy to President Ronald Reagan, nan astir successful periods of economical description successful American history followed important reductions successful taxation rates.

The 2017 Tax Cuts and Jobs Act, signed into rule nether Trump’s leadership, was nary exception.

The little firm and individual income-tax rates successful nan TCJA sparked investment, drove costs maturation and boosted job-creation.

In contrast, raising nan apical income-tax complaint now would nonstop nan incorrect connection to job-creators, small-business owners and investors — astir of whom record arsenic pass-through entities and would beryllium straight impacted by specified an increase. 

Penalizing nan very motor of occupation creation successful this state would beryllium an economical misstep pinch far-reaching consequences.

In fact, alternatively than considering increases, we should beryllium looking for opportunities astatine this clip to further trim rates and compress income-tax brackets.

Additionally, lowering nan capital-gains taxation to 15% would spur investment, unleash dormant superior and supply a much-needed boost to semipermanent economical growth.

As a governmental matter, we’ve seen what happens to elector support for nan GOP erstwhile nan statement raises taxation rates.

The 1990 taxation hike nether President George H.W. Bush contributed to a sluggish betterment and group nan shape for governmental upheaval.

Increasing taxation burdens connected nan astir productive segments of nan system weakens maturation and discourages risk-taking and innovation. 

We impulse President Trump to enactment existent to nan Republican Party’s long-held committedness to debased taxation rates and a vibrant free marketplace economy.

Rather than backpedaling connected these halfway principles, now is nan clip to double down connected policies that beforehand growth, title and entrepreneurial dynamism.

Raising nan apical taxation complaint would undercut those efforts and nonstop a awesome of retreat from nan economical accuracy that has made America nan astir prosperous federation successful history.

The 2017 Tax Cuts and Jobs Act was an overwhelming economical success.

We look guardant to continuing to activity pinch nan president to make those taxation cuts permanent — and to little taxation rates to make nan American system awesome again.

Steve Forbes, Arthur Laffer and Stephen Moore are co-founders of Unleash Prosperity.