Democrats said that we could not afford tax cuts–that the Trump tax cuts would topple the federal budget. Tax revenue would be fatally lower. But just the opposite happened.
As IBD reports, the federal government actually collected more money from income taxes:
[After the tax cuts] individual income taxes climbed 6% in the just-ended fiscal year 2018, as the economy grew faster and created more jobs than expected.
The Treasury Department reported this week that individual income tax collections for FY 2018 totaled $1.7 trillion. That's up $14 billion from fiscal 2017, and an all-time high. And that's despite the fact that individual income tax rates got a significant cut this year as part of President Donald Trump's tax reform plan.
Overall, the federal government has done very well in the wake of tax cuts:
Other major sources of revenue climbed as well, as the overall economy revived. FICA tax collections rose by more than 3%. Excise taxes jumped 13%.
The only category that was down? Corporate income taxes, which dropped by 31%.
Overall, federal revenues came in slightly higher in FY 2018 — up 0.5%.
I'm not sure that the government's raking in record taxes from American citizens is unmitigated good news, but it does demolish a popular talking point of the anti-cut side. It also makes the point: prosperity, not higher taxes, is key to revenue.
What we really should see is a decline in government spending–and this we don't see.
Government spending was up $127 billion in fiscal 2018. Thus deficits for 2018 rose by $113 billion.
IBD compares the last year of President Obama with President Trump's first year–tax revenue went up around .05 percent in the last Obama year (comparable with first Trump year), but the deficits went up by $148 billion.
Opponents of the tax cuts insist that they are responsible for the Trump deficits. Since the economy was already booming, they contend, revenue would have gone up more without the cuts. IBD challenges this view:
Yes, the economy was booming in fiscal 2018. But it probably wouldn't have been booming without the tax cuts. Had Trump not succeeded in getting his pro-growth tax cuts across the finish line, it's possible we'd have seen a year like Obama's last one. A sluggish economy, barely increasing federal revenues, and a large increase in deficits.
Does that mean Trump's tax cuts are fully "paying for themselves"? We wouldn't make that argument. But the faster economic growth is clearly offsetting at least some of their costs — which is precisely what backers said would happen.
What is unmistakable from the data, however, is that the Trump tax cuts are not entirely, or even mostly, responsible for the increase in the deficit. Blame for that rests squarely with spendthrifts in Congress — on both sides of the aisle — who refuse to bring federal spending under control.
So, the question is: Would it have been better to have kept taxes high, and sacrificed economic, job and wage gains we've been enjoying, so that the government could have collected a little bit more in taxes?
The question that isn't asked: shouldn't the government cut spending and get by with a little less money from our pockets?