The current political climate can be confusing when it comes to defining which party is truly supporting supply-side economics. Traditionally seen as a conservative hallmark, today's political landscape shows a different picture.
The Conservative Dilemma
It appears that conservatives find themselves in a complicated position. Instead of championing supply-side policies, they seem to be mired in a populist dynamic. One of the most prominent examples is the approach undertaken by Donald Trump's administration:
- Implementation of massive tariffs across various sectors.
- Offered tax deductions that may seem irrelevant for overtime, wages, and even car interstates.
Revisiting the 2017 Tax Act
The 2017 tax act has been labeled by some as a supply-side measure. It incorporated several incentives aimed at boosting economic activity:
- Reduction of the corporate tax rate from 35% to 21%. Notably, there are proposals, such as from Kamala Harris, to increase it to 28%.
- Provision of a 20% tax reduction for entrepreneurs.
Impacts on Supply-Side Production
One critical point of debate is whether cutting the corporate tax rate leads to an increase or decrease in supply-side production. Here's an important distinction to consider:
- While it might seem intuitive to assume a tax cut would reduce supply-side production, the opposite is often observed.
- With lower taxes, corporations have more capital to reinvest into their production capabilities.
- This reinvestment often results in enhanced supply capabilities, ultimately leading to economic growth.
In conclusion, defining supply-side support requires more than just examining tariff policies or tax rate changes. It's essential to look at how these policies translate into actual economic growth and capability enhancement.
What are your thoughts on the current alignment of political parties and their economic policies? Share your thoughts in the comments below!
Full Transcript
I don't feel like conservatives are very much the party of supply side help right now. They're stuck in this weird populist world where it feels like they're attacking everybody when Donald Trump's only policy is like this sledgehammer of massive tariffs for everything and then irrelevant tax deductions for like overtime and wages and car interstatements I guess. So you don't see the 2017 tax act as a supply side. The tax proposal with all of the incentives reducing the corporate tax rate from 3521 which Kamala wants to increase to 28 reducing the tax on entrepreneurs by 20%. If you cut the corporate tax rate wouldn't that lead to a decrease and supply side production? No it always results in increase because corporations aren't people right. Corporations now have more money to reinvest into supply that's where they have more money if they don't have such a high tax rate.
