Peter Schiff, a staunch advocate of lower taxes to boost economic output, weighs in on Donald Trump’s tax plan released yesterday. Schiff contends,
“He actually lived up to expectations, in fact, he may have actually exceeded them when it comes to the magnitude of the tax cut that he proposed on schedule.”
And confirms this,
“Could well be the biggest tax cut in American history.”
Schiff Questions Trump Tax Cuts with No Government Spending Cuts
Schiff would only be in support of these tax cuts if accompanied with cuts in government spending.
Trump is betting the lower tax rates will pay for themselves, but Schiff disagrees. He argues that,
“These tax cuts are so enormous, that there is no way that the economic growth can make up the difference, even if we get the higher economic growth.”
Schiff points to higher interest rates that will also stifle growth and the Treasury. The US Treasury will lose enormous amounts of revenue if Trump’s tax plan is approved.
Schiff is now predicting budget deficits in the range of $2 trillion annually, far exceeding Obama’s largest ever deficit. Finally, the economist provides one caveat:
“Once they get the tax cuts implemented, then the government might have no choice, if the Republicans stand firm against raising taxes back up, then the only way out of the disaster, would be to have dramatic cuts in government spending.”
Warning to Canadians:
If Trump’s new plan is approved it will drop the average American business tax rate to 20% from 35%. One of Canada’s largest advantages was its average combined federal-provincial corporate tax rate of about 27%. This has lured investment from the US for years. Again, if Trump’s new plan is approved, Canadian companies looking to draw talent from the US could find themselves in a world of hurt.
