ICYMI: George Will- The Simple Arithmetic that Could Jump-Start America’s Economic Growth
The simple arithmetic that could jump-start America’s economic growth
By George Will
The Washington Post
January 31, 2016
“Today, Rep. Kevin Brady wants to change the way government pays attention to taxpayers.
“If there is going to be growth-igniting tax reform — and if there isn’t, American politics will sink deeper into distributional strife — Brady will begin it. Fortunately, the Houston congressman is focused on this simple arithmetic: Three percent growth is not 1 percent better than 2 percent growth, it is 50 percent better.
“If the Obama era’s average annual growth of 2.2 percent becomes the ‘new normal,’ over the next 50 years real gross domestic product will grow from today’s $16.3 trillion (in 2009 dollars) to $48.3 trillion. If, however, growth averages 3.2 percent, real GDP in 2065 will be $78.6 trillion. At 2.2 percent growth, the cumulative lost wealth would be $521 trillion.
“Brady, however, would like to start with the approximately $2 trillion that U.S. corporations have parked overseas. Having already paid taxes on it where it was earned, the corporations sensibly resist having it taxed again by the United States’ corporate tax, the highest in the industrial world. ‘[The $2 trillion] won’t just naturally fly back to us,’ Brady says. Measures should be taken to make it rational for corporations to bring money home. And to make it rational for corporations such as Pfizer, which recently moved its headquarters to Ireland for tax purposes, to remain here.
“In the past 30 years, Brady says, more and more taxes have been paid by fewer and fewer people. And fewer and fewer businesses have been organized as corporations: Three-quarters of job-creating entities are not paying corporate taxes.
“‘You can’t,’ Brady says, ‘ask people to make big changes, leapfrogging our global competitors, just to get to average.’ But making big changes ‘is why we all came to Congress.’ And the benefit that comes from something unfortunate — the fact that there are so few (perhaps fewer than 40) competitive House seats — is that members can take risks. Presidential engagement is necessary for tax reform, and Brady says that will require a new president who understands that ‘just a little respect goes a long way up here [on Capitol Hill].’”
Read the entire column online here.