Larry Kudlow: Trump Will Reject Tax Hike Rumors

Rejection of Tax Hike Rumors

• 💡 Larry Kudlow expresses disbelief in rumors of a Trump tax hike, despite a Bloomberg article suggesting otherwise.
• 🎯 He believes President Trump, knowing his tendency to discuss but ultimately reject proposals, will not sign off on tax increases.

The 2017 Tax Cuts

• 🔑 The core promise is the extension of the 2017 tax cuts, maintaining the 37% top bracket and providing cuts for lower income brackets.
• 💰 Key provisions include a doubled standard deduction, increased child tax credit, a 12% rate on foreign income, a 21% corporate tax rate, and 100% expensing for machinery.

Economic Rationale Against Tax Hikes

• 📉 The argument against tax hikes is that they don't make sense when the baseline policy is to merely extend existing cuts and be deficit-neutral.
• ⚠️ Kudlow highlights that small business owners (LLCs, S-corps) are disproportionately affected by top personal tax rates, and they are already concerned about tariffs.
• 📈 The Laffer Curve principle is invoked, suggesting higher tax rates lead to lower revenues due to weaker economic activity and tax avoidance.

Counterarguments and Alternative Financing

• 🧐 Kudlow questions the logic of penalizing high earners to offset benefits for high earners, stating President Trump is a common-sense leader.
• 🏦 He suggests Treasury officials should focus on extending the 2017 tax cuts rather than exploring new tax ideas.
• 💰 Alternative financing for Trump's proposed tax additions (like tax-free overtime or a 15% made-in-America corporate tax cut) could come from sources like tariff revenues.

Rewarding Success

• ✨ Kudlow emphasizes that Trump's philosophy is about rewarding success, not punishing it, and that individuals and businesses should not be penalized for wealth creation.
• 🚀 The goal is to reprivatize the economy, fostering dynamism and risk-taking, which is incompatible with raising taxes on successful earners.