Conservative Vs Liberal On Trumps Tax Plans

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:

1. Reduction of the corporate tax rate from 35% to 21%. Notably, there are proposals, such as from Kamala Harris, to increase it to 28%.
2. 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!