Right On: Economy booms, rich pay more taxes

Money background by OlyaSolodenko/iStock/Getty Images Plus, Graph overlay by i3alda/iStock/Getty Images Plus, St. George News

OPINION — Southern Utah and the rest of the country are finally rebounding from the Obama administration’s stunted recovery.

Credit belongs to reining in nanny-state federal regulations and to Republican tax reform.

No longer smothered by picayune federal regulations and the fear of even more to come, the economy began a dynamic growth surge last year. Now with Republican tax reform in place, we’re finally seeing signs of the economic dynamism characteristic of the world’s largest free market.

We had far better 2018 first quarter growth than in Obama’s last several years. Economists are united in predicting that 2018 will be our best year since before Obama’s hyperregulatory, tax-raising administration took over.

Jobs are plentiful. According to National Federation of Independent Business Chief Economist William Dunkelberg, “The increase in new business establishments is running well ahead of eliminations, a real boost to new employment.”

The black jobless rate has fallen a remarkable 1.3 percentage points to 6.6 percent since April 2017. The jobless rate for Hispanics has fallen by 0.4 points in a year to 4.8 percent, matching its record low.

In fact, employers large and small nationwide are having problems filling jobs. Southern Utah help wanted signs are as plentiful as springtime weeds. If you want work, you can find work.

The federal Bureau of Economic Analysis recently reported that workers’ inflation-adjusted earnings after taxes rose 3.4 percent in the first quarter of this year. The bureau specifically credited tax reform for higher wages as well as lower taxes. That’s a lot more than the crumbs Nancy Pelosi said we’d get.

As in boom times past, construction jobs lead the Southern Utah pack. Houses are rising out of the ground all over the area, limited only by the availability of construction workers. Try finding a plumber, electrician or cabinet maker for a home remodel job.

Business investment is booming just as Republican tax reformers said it would. Companies are investing money that had been trapped overseas by our previous punitive tax laws, the most confiscatory in the world before the Republican reform.

Union Bank of Switzerland reports that capital spending by large companies surged 39 percent so far this year. Research and development spending is at its highest proportion of sales since at least 1990 according to Goldman Sachs. It’s at its highest proportion of gross domestic product since the government started tracking it in 1959.

The Wall Street Journal believes that “Barack Obama’s anti-business policies stifled investment and deregulation and tax reform seem to be liberating it.”

All these investments lead directly to productivity gains that in turn lead to higher wages as each worker can produce more goods and services.

In Southern Utah, we don’t have much manufacturing. But business investment pays dividends here nonetheless. How about productivity-enhancing 4G mobile phone service and fiber optic cable connections to the world? 5G wireless service is next. St. George’s Tech Ridge will require major investments both in buildings and the equipment and furnishings that go in them.

Let’s talk taxes. Democrats and the mainstream media – but I repeat myself – have suddenly found national-debt religion, complaining about rising deficits. They ignored them during eight years of Obama’s spending blowout and anemic economic recovery.

You won’t hear it from them, but the nonpartisan Congressional Budget Office projects that as a result of tax reform, the economy will grow 3.3 percent this year. That’s up from 2.4 percent had Democratic taxes stayed in place.

The CBO estimates that this faster growth will result in higher federal tax revenue. Its new projections show an additional $1 trillion in tax revenue over the next 10 years because of the law. This year’s deficit will be a little higher but additional growth adds tax revenue in later years.

Consulting firm Strategas predicts that future tax revenues are likely “to surprise on the upside from current revenue estimates.”

Every time the federal government cuts tax rates, tax receipts grow. Why? The economy grows, incomes increase and more taxes are paid. When will anti-business, tax-and-spend Democrats learn?

So who’s paying this additional tax? All you heard from Democrats was that Republicans cut taxes for the rich.

But get ready for this: The nonpartisan Tax Policy Center estimates that high income Americans will pay an even larger percentage of personal income taxes than they did before. Specifically, the center estimates that the top 20 percent of earners will pay 87 percent of income taxes in 2018, up from 84 percent in 2017. Yet their share of national income will remain at about 52 percent.

Many of us in the lower 60 percent who paid taxes last year will pay none in 2018. Democrats should be cheering an even more progressive income tax.

So what’s not to like? To paraphrase a famous Groucho Marx line, “Who you gonna believe, Nancy Pelosi or your own paycheck?”

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews

Copyright St. George News, SaintGeorgeUtah.com LLC, 2018, all rights reserved.

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7 Comments

  • Utahguns May 17, 2018 at 3:55 pm

    All three of my sons have seen an increase in (using a Pelosi-ism…) crumbs on their paycheck each month to cover either their monthly cell phone bill or their monthly ISP bill.
    One of ’em even voted for Clinton, but, has he now come around to understand and support conservative thinking.

    • RadRabbit May 17, 2018 at 5:43 pm

      My “crumbs” have been adding up nicely! Like the old saying goes “A rising tide lifts all boats”. Now if we can just start cutting back on entitlements we’ll be good.

      • Steve May 18, 2018 at 11:26 am

        “Entitlements”???? Pathetic imbecility must run in your family!

        • RadRabbit May 18, 2018 at 5:26 pm

          Ha! you may know them as handouts like people illegally here getting medicaid or able bodied people getting food stamps and welfare cause they choose not to strive for more and work harder (I know of at least a few personally in this case). Also government waste could be cut like the $335 million the National Endowment for Arts will get this year and $445 million for the Corporation for Public Broadcasting. There’s many more places to cut but just an example.

  • commonsense May 17, 2018 at 10:04 pm

    Liberals can still hate Trump and spin the narrative if they must but this is a great time in America.
    Polls show optimism is at a two decade high. Blacks, Hispanics and women’s wages have never been higher and jobs are up over three million in just a year. Just think how that impacts individuals and families. Taxes are lower and Federal revenues are up.

    Looks to me like we should all come together and celebrate.

  • Steve May 18, 2018 at 11:34 am

    Don’t forget record deficits because of the ridiculous tax cuts that mostly benefited the wealthy.

  • No Filter May 18, 2018 at 12:32 pm

    These tax cuts are like getting a brand new credit card with 0% Interest for the first 6 months. Everything is great at first and life is grand until that first payment comes due with interest and you have to struggle to pay the minimum payment for 20 years and end up paying 10 times the amount you spent initially and you realize you don’t even have that stuff anymore to enjoy. Good luck America, your going to need it!

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