Tom Del Beccaro: Expect Long-term Growth from Trump’s Tax Reform

Ms. Gao: Engaging in a trade war while reconstructing the world trade order is only made possible because of one important factor — a strong U.S. economy. So how will the U.S. economy do in the next few years? I spoke with Tom Del Beccaro, a tax expert who is the author of The Divided Era. This is what he has to say from the tax reform point of view.

Mr. Del Beccaro: Yes, when I was assisting the administration last year with the passage of the tax reform bill, I predicted if it passed, that we would see growth above 4 percent in the second and third quarters of this year. Certainly the 4.1 percent we saw for the second quarter has come true, and the Atlanta fed says we’re on track to closer to 5 percent for the third quarter. And the reason why this is occurring is there’s been a fundamental restructuring. There’s two types of tax reforms: one time giveaways, which the United States did under the Ford administration and the Carter administration, which has very little effect. Smaller tax reductions, like which occurred under Bush 43, or the really large reforms that occurred under Coolidge in the ‘20s, under Kennedy in the ‘60s, and Reagan in the ‘80s. And we’re closer – this reform package is much more like the major reform of Kennedy, Coolidge, and Reagan. And I expect long-term growth to occur, increases, much better than what we’ve seen in the last 20 years. And we know this is possible, in part because of the money that’s coming home. President Trump talked about the fact that there’s 5 trillion U.S. dollars overseas that wouldn’t come home because of double taxation. That’s been removed. In the first quarter of 2018, over 300 billion came home. That’s a marked contrast from the first quarter of the year before when it was only 30. That kind of stimulus alone, that’s true stimulus, would increase growth in the economy. But because there’s an actual fundamental change in the corporate tax code, I expect to see sustained growth, barring some sort of international security incident or calamity, I expect long-term growth.

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