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Wall Street Journal

Tax Reform Is No ‘Sugar High’

By Rep. Kevin Brady (R-TX) and Lawrence B. Lindsey

March 27, 2019

The current mantra from opponents of the 2017 Tax Cuts and Jobs Act is that the strong economic growth that followed is the result of a “sugar high.” Many now wrongly argue the U.S. is headed for a sharp economic slowdown, possibly even recession. These arguments reflect political and ideological wishful thinking, not a substantive analysis of what is happening in the economy.

. . .

Thanks to the tax cuts and deregulation, the economy boomed in 2018 despite monetary tightening. The old tax code disincentivized American companies from growing in the U.S. and forced jobs, production and intellectual property offshore. U.S. companies now can invest in the U.S. without a competitive disadvantage. For the first time in memory, more foreign direct investment is coming into the U.S. than going out. Jobs, research and production are returning from overseas.

. . .

There is no reason to expect the American growth machine to sputter out soon as long as sound tax and regulatory policies continue. Personal income grew 4.5% in 2018 but at an annual rate of 5.7% in the last half of the year. With one million more job openings than there are people looking for jobs, personal income is likely to grow even faster in 2019. With inflation low, that higher income should translate into consumption growth of roughly 3%; consumption makes up 70% of the economy. . . .

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