ECONOMISTS love to debunk the analogy that is often drawn between the government’s budget and that of a household. (Much of the government’s debt is held by its own taxpayers; households borrow exclusively from outside sources.) But there is another, equally flawed analogy, to which Donald Trump subscribes: that writing economic policy is comparable to making business decisions. Mr Trump’s thirteen-strong team of economic advisers, announced on Friday, is packed full of rich businessmen (and only men). Just three have relevant backgrounds in economics.
Does high-quality economic advice matter? Mr Trump’s ludicrous tax plan—which is likely to be revised tomorrow—suggests it does. The plan achieved the unlikely feat of being both hugely expensive and yet startlingly inefficient. Instead of combining tax-cuts with measures to broaden the tax base—a combination tax-reformers have long called for—it shrinks the tax base slightly. And Mr Trump omitted the growth-boosting reforms to the corporation tax that conservative economists favour. The Tax Foundation, a think-tank, found that Mr Trump’s cuts, which cost $12 trillion...Continue reading
Source: United States http://ift.tt/2aK0qrm
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