Three Ways Trump’s Tax “Cuts” Will Raise Taxes

Tax cuts are great when they are actually tax cuts. In a system with a central bank, though, tax cuts are never tax cuts if there are no spending cuts to accompany them. This is because tax cuts without spending cuts simply mean more deficit spending.
Unfortunately, it is clear that under Trump the federal government has every intention of spending as it always has. Indeed, the Trump administration plans to spend even more than its predecessors by raising military spending without making any sizable cuts to any other program.
So what does it mean if the government plans to spend more but says it will cut its revenue via tax cuts? It means there will be more deficit spending. And, contrary to what Dick Cheney may think, deficits do matter, and they mean higher costs for many millions of Americans.

This post was published at Ludwig von Mises Institute on May 11, 2017.