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On May 9th, 2018, the YouTube Channel, Juice Media uploaded a video entitled “Honest Government Ad: Trickle Down Economics.” In the video, the rather obnoxious and condescending female presenter tells the audience that the reason Australia has “one of the fastest growing inequality rates in the world” is trickle-down economics, which she defines as “when we [the government] piss on you and tell you it’s raining.”
According to the video, tax cuts for investors, entrepreneurs, and business are directly correlated with poverty and the lack of wage growth in Australia. The presenter argues that the government cuts taxes on the rich while simultaneously claiming that they don’t have enough money for healthcare (which would be a lot more effective if people took responsibility for their own health), renewable energy (which is really an excuse to take control of the energy market), and the ABC (which doesn’t deserve a cent of anyone’s money).
The primary problem with the video is that the premise of its argument does not actually exist. There is not a single economic theory that can be identified as trickle-down economics (also known as trickle-down theory). No reputable economist has ever used the term, nor have they ever presented an argument that could be said to conform to the idea of what it is supposed to be. As Thomas Sowell (1930 – ) wrote in his book, Basic Economics:
“There have been many economic theories over the centuries accompanies by controversies among different schools and economists, but one of the most politically prominent economic theories today is one that has never existed among economists: the trickle-down theory. People who are politically committed to policies of redistributing income and who tend to emphasise the conflicts between business and labour rather than their mutual interdependence often accuse those opposed to them of believing that benefits must be given wealthy in general, or to business in particular that these benefits will eventually trickle down to the masses of ordinary people. But no recognised economist of any school of thought has ever had any such theory or made any such proposal.”
The key to understanding why political players disparage pro-capitalist and pro-free market economic policies as trickle-down economics is understanding how economics is used to deceive and manipulate. Political players understand that simple and emotionally-charged arguments tend to be more effective because very few people understand actual economics. Anti-capitalists and anti-free marketeers, therefore, use the term trickle-down economics to disparage economic policy that disproportionately benefits the wealthy in the short term, and increases the standards of living for all peoples in the long-term
The economic theory championed by liberals (read: leftists) is demand-side economics. Classical economics rejected demand-side economic theory for two reasons. First, manipulating demands is futile because demand is the result of product, not its cause. Second, it is (supposedly) impossible to over-produce something. The French economist, Jean-Baptiste Say (1767 – 1832) demonstrated the irrelevance of demand-side economics by pointing out that demand is derived from the supply of goods and services to the market. As a consequence of the works of Jean-Baptiste Say, the British economist, David Ricardo (1772 – 1823), and other classical economists, demand-side economic theory lay dormant for more than a century.
One classical economist, however, was prepared to challenge the classical economic view of demand-side economics. The English economist, Thomas Robert Malthus (1766 – 1834) challenged the anti-demand view of classical economics by arguing that the recession Great Britain experienced in the aftermath Napoleonic Wars (1803 – 1815) was caused by a failure of demand. In other words, purchasing power fell below the number of goods and services in the market. Malthus wrote:
“A nation must certainly have the power of purchasing all that it produces, but I can easily conceive it not to have the will… You have never I think taken sufficiently into consideration the wants and tastes of mankind. It is not merely the proportion of commodities to each other but their proportion to the wants and tastes of mankind that determines prices.”
Using this as his basis, Malthus argued that goods and services on the market could outstrip demand if consumers choose not to spend their money. Malthus believed that while production could increase demand, it was powerless to create the will to consume among individuals.
Demand-side economics works on the theory that economic growth can be stimulated by increasing the demand for goods and services. The American economist, J.D. Foster, the Norman B. Ture Fellow in the Economics of Fiscal Policy at the Heritage Foundation, argued that demand-side works on the theory that the economy is underperforming because the total demand is low, and, as a consequence, the supply needed to meet this demand is likewise low.
The American economist, Paul Krugman (1953 – ), and other economists believe that recessions and depressions are the results of a decrease in demand and that the most effective method of revivifying the economy is to stimulate that demand. The way to do this is to engage in large-scale infrastructure projects such as the building of bridges, railways, and highways. These projects create a greater demand for things like steel, asphalt, and so forth. And, furthermore, it provides people with a wage which they can spend on things like food, housing, clothing, entertainment, so on and so forth.
Policies based on demand-side economics aims to change the aggregate demand in the economy. Aggregate demand is consumer spending + investment + net import/export. Demand-side economics policies are either expansive or contractive. Expansive demand-side policies aim at stimulating spending during a recession. By contrast, contractive demand-side policies aim at reducing expenditure during an inflationary economy.
Demand-side policy can be split into fiscal policy and monetary policy. The purpose of fiscal policy in this regard is to increase aggregate demand. Demand-side based fiscal policy can help close the deflationary gap but is often not sustainable over the long-term and can have the effect of increasing the national debt. When such policies aim at cutting spending and increasing taxes, they tend to be politically unpopular. But when such policies that involve lowering taxes and increasing spending, they tend to be politically popular and therefore easy to execute (of course they never bother to explain where they plan to get the money from).
In terms of monetary policy, expansive demand-side economic aims at increasing aggregate demand while contractive monetary policy in demand-side economics aims at decreasing it. Monetary expansive policies are less efficient because it is less predictable and efficient than contractive policies.
Needless to say, demand-side economics has plenty of critics. According to D.W. McKenzie of the Mises Institute, demand-side economics works on the idea that “there are times when total spending in the economy will not be enough to provide employment to all want to and should be working.” McKenzie argued that the “notion that economics as a whole, sometimes lacks sufficient drive derives from a faulty set of economic doctrines that focus on the demand side of the aggregate economy.” Likewise, Thomas Sowell argued in Supply-Side Politics that there is too much emphasis placed on demand-side economics to the detriment of supply-side economics. He wrote in an article for Forbes:
“If Keynesian economics stressed the supposed benefit of having government manipulate aggregate demand, supply-side economics stressed what the marketplace could accomplish, one it was freed from government control and taxes.”
The man who greatly popularised demand-side economics was the British economist, John Maynard Keynes (1883 – 1946). Keynes, along with many other economists, analysed the arguments of the classical economists against the realities of the Great Depression. Their analysis led many economists to question the arguments of the classical economists. They noted that classical economics failed to answer how financial disasters like the Great Depression could happen.
Keynesian economics challenged the views of the classical economists. In his 1936 book, The General Theory of Employment, Interest and Money (one of the foundational texts on the subject of modern macroeconomics) Keynes revivified demand-side economics. According to Keynes, output is determined by the level of aggregate demand. Keynes argued that resources are not scarce in many cases, but that they are underutilised due to a lack of demand. Therefore, an increase in production requires an increase in demand. Keynes’ concluded that when this occurs it is the duty of the government to raise output and total employment by stimulating aggregate demand through fiscal and monetary policy.
The Great Depression is often seen as a failure of capitalism. It popularised Keynesian economics and monetary central planning which, together, “eroded and eventually destroyed the great policy barrier – that is, the old-time religion of balanced budgets – that had kept America relatively peaceful Republic until 1914.”
David Stockman of the Mises Institute argues that the Great Depression was the result of the delayed consequences of the Great War (1914 – 1918) and financial deformations created by modern central banking. However, the view that the Great Depression was a failure of capitalism is not one shared by every economist. The American economist, Milton Friedman (1912 – 2006), for example, argued that the Great Depression was a failure of monetary policy. Friedman pointed out that the total quantity of money in the United States – currency, bank deposits, and so forth – between 1929 and 1933 declined by one-third. He argued that the Federal Reserve had failed to prevent the decline of the quantity of money despite having the power and obligation to do so. According to Friedman, had the Federal Reserve acted to prevent the decline in the quantity of money, the United States (and subsequently, the world) would only have suffered a “garden variety recession” rather than a prolonged economic depression.
It is not possible to determine the exact dimensions of the Great Depression using quantitative data. What is known, however, is that it caused a great deal of misery and despair among the peoples of the world. Failed macroeconomic policies combined with negative shocks caused the economic output of several countries to fall between twenty-five and thirty-percent between 1929 and 1932/33. In America between 1929 and 1933, production in mines, factories, and utilities fell by more than fifty-percent, stock prices collapsed to 1/10th of what they had been prior to the Wall Street crash, real disposable income fell by twenty-eight percent, and unemployment rose from 1.6 to 12.8 million.
According to an article for the Foundation for Economic Education, What Caused the Great Depression, the Great Depression occurred in three phases. First, the rise of “easy money policies” caused an economic boom followed by a subsequent crash. Second, following the crash, President Herbert Hoover (1874 – 1964) attempted to suppress the self-adjusting aspect of the market by engaging in interventionist policies. This caused a prolonged recession and prevented recovery. Hourly rates dropped by fifty-percent, millions lost their jobs (a reality made worse by the absence of unemployment insurance), prices on agricultural products dropped to their lowest point since the Civil War (1861 – 1865), more than thirty-thousand businesses failed, and hundreds of banks failed. Third, in 1933, the lowest point of the Depression, the newly-elected President Franklin Delano Roosevelt (1882 – 1945) combatted the economic crisis by using “new deal” economic policies to expand interventionist measures into almost every facet of the American economy.
Let’s talk about the New Deal a little bit more. The New Deal was the name for the Keynesian-based economic policies that President Roosevelt used to try and end the Great Depression. It included forty-seven Congress-approved programs that abandoned laissez-faire capitalism and enacted the kind of social and economic reforms that Europe had enjoyed for more than a generation. Ultimately, the New Deal aimed to create jobs, provide relief for farmers, boost manufacturing by building partnerships between the private and public sectors, and stabilise the US financial system.
The New Deal was largely inspired by the events of the Great War. During the War, the US Government had managed to increase economic activity by establishing planning boards to set wages and prices. President Roosevelt took this as proof positive that it was government guidance, not private business, that helped grow the economy. However, Roosevelt failed to realise that the increase in economic activity during the Great War came as the result of inflated war demands, not as the achievement of government planning. Roosevelt believed, falsely, that it was better to have government control the economy in times of crisis rather than relying on the market to correct itself.
The New Deal came in three waves. During his first hundred days in office, President Roosevelt approved the Emergency Banking Act, Government Economy Act, the Civilian Conservation Corps, the Federal Emergency Relief Act, Agricultural Adjustment Act, Emergency Farm Mortgage Act, the Tennessee Valley Authority Act, the Security Act, Abrogation of Gold Payment Clause, the Home Owners Refinancing Act, the Glass-Steagall Banking Act, the National Industrial Recovery Act, the Emergency Railroad Transportation Act, and the Civil Works Administration.
In 1934, President Roosevelt bolstered his initial efforts by pushing through the Gold Reserve Act, the National Housing Act, the Securities Exchange Act, and the Federal Communications Act.
In 1935, the Supreme Court rejected the National Industrial Act. President Roosevelt, concerned that other New Deal programs could also be in jeopardy, embarked on a litany of programs that would help the poor, the unemployed, and farmers. Second-wave New Deal programs included Soil Conservation and Domestic Allotment Act, Emergency Relief Appropriation, the Rural Electrification Act, the National Labor Relations Act, the Resettlement Act, and the Social Securities Act.
In 1937, Roosevelt unleashed the third wave of the New Deal by aiming to combat budget deficits. It included the United States Housing Act (Wagner-Steagall), the Bonneville Power Administration, the Farm Tenancy Act, the Farm Security Administration, the Federal National Mortgage, the New Agriculture Adjustment Act, and the Labor Standards Act.
According to the historical consensus, the New Deal proved effective in boosting the American economy. Economic growth increased by 1.8% in 1935, 12.9% in 1936, and 3.3% in 1937. It built schools, roads, hospitals, and more, prevented the collapse of the banking system, reemployed millions, and restored confidence among the American people.
Some even claim that the New Deal didn’t go far enough. Adam Cohen, the author of Nothing to Fear: FDR’s Inner Circle and the Hundred Days that Created Modern America, claims that the longevity of the Depression (the American economy didn’t return to pre-depression prosperity until the 1950s) is evidence that more New Deal spending was needed. Cohen commented that the New Deal had the effect of steadily increasing GDP (gross domestic product) and reducing unemployment. And, which is more, it reimagined the US Federal government as a welfare provider, a stock-market regulator, and a helper of people in financial difficulty.
However, the historical consensus is not to say that the New Deal is without its critics. The New Deal was criticised by many conservative businessmen for being too socialist. Others, such as Huey Long (1893 – 1935), criticised it for failing to do enough for the poor. Henry Morgenthau, Jr. (1891 – 1967), the Secretary of the Treasury, confessed before Democrats in the House Ways and Means Committee on May 9th, 1939 that the New Deal had failed as public policy. According to Morgenthau, it failed to produce an economic recovery and did not erase historic unemployment. Instead, it created a recession – the Roosevelt Recession – in 1937, failed to adequately combat unemployment because it created jobs that were only temporary, became the costliest government program in US history, and wasted money.
Conservatives offer supply-side economics as an alternative to demand-side economics. Supply-side economics aims at increasing aggregate supply. According to supply-side economics, the best way to stimulate economic growth or recovery is to lower taxes and thus increase the supply of goods and services. This increase leads, in turn, to lower prices and higher standards of living.
The lower-taxes policy has proved quite popular with politicians. The American businessman and industrialist, Andrew Mellon (1855 – 1937) argued for lower taxes in the 1920s, President John Fitzgerald Kennedy (1917 – 1963) argued for lower taxes in the 1960s, and both President Ronald Reagan (1911 – 2004) and President George Walker Bush (1946 – ) lowered taxes in the 1980s and 2000s, respectively.
Supply-side economics works on the principle that producers will create new and better products if they are allowed to keep their money. Put simply, supply-side economics (supply merely refers to the production of goods and services) works on the theory that cutting taxes on entrepreneurs, investors, and business-people incentives them to invest more in their endeavours. This money can be invested in capital – industrial machinery, factories, software, office buildings, and so forth.
The idea that lower taxes lead to greater economic prosperity is one of the central tenants of supply-side economics. Supporters of supply-side economics believe that providing financial benefits for investors (cutting capital gains tax, for example) stimulates economic growth. By contrast, high taxes, especially those metered out on businesses, discourage investment and encourages stagnation.
Tax rates and tax revenue are not the same thing, they can move in opposite directions depending on economic factors. The revenue collected from income tax for each year of the Reagan Presidency was higher than the revenues collected during any year of any previous Presidency. It can be argued that people change their economic behaviour according to the way they are taxed. The problem with increasing taxes on the rich is that the rich will use legal, and sometimes illegal, strategies for avoiding paying it. A businessman who is forced to pay forty-percent of his business’ profits on taxation is less likely to increase his productivity. As a consequence, high tax rates on businesses leads to economic stagnation.
Supply-side supporters use Arthur Laffer’s (1940 – ) – an advisor to President Ronald Regan – Laffer Curve to argue that lower taxes lead to higher tax revenue. The Laffer curve showed the dichotomy between tax revenue and the amount of tax that is collected. Laffer’s idea that the more taxation increased, the more tax revenue is collected. However, if taxes are increased beyond a certain point, less revenue is collected because people are no longer willing to make an economic contribution.
Taxation only works when the price of engaging in productive behaviour is likewise reduced. Daniel Mitchell of the Heritage Foundation stated in an article entitled a “Supply-Side” Success Story, that tax cuts are not created equally. Mitchell wrote: “Tax cuts based on the Keynesian notion of putting money in people’s pockets in the form of rebates and credits do not work. Supply-side cuts, by contrast, do improve economic performance because they reduce tax rates on work, saving, and investment.” Mitchell used the differences between the 2001 and 2003 tax cuts as evidence for his argument. Mitchell pointed out that tax collections fell after the 2001 tax cuts whereas they grew by six-percent annually after the 2003 cuts. Mitchell points out that job numbers declined after the 2001 cuts whereas net job creation averaged more than 150,000 after the 2003 cuts. Mitchell points out that economic growth averaged 1.9% after the 2001 tax cuts, compared to 4.4% after the 2003 cuts.
Proposals to cut taxes have always been characterised by its opponents as “tax cuts for the rich.” The left believes that tax cuts, especially cuts on the top rate of tax, does not spur economic growth for lower and middle-class people and only serves to widen income inequality. They argue that tax cuts benefit the wealthy because they invest their newfound money in enterprises that benefit themselves. Bernie Sanders (1941 – ), the Independent Senator from Vermont, has argued that “trickle-down economics” is pushed by lobbyists and corporations to expand the wealth of the rich. Whilst opponents of President Ronal Reagan’s tax cuts likewise referred to the policy as “trickle-down economics.”
In reality, the left-wing slander of tax cuts can best be described as “tax lies for the gullible.” The rich do not become wealthy by spending frivolously or by hiding their money under the mattress. The rich become rich because they are prepared to invest their money in new products and ventures that will generate greater wealth. In reality, it is far more prudent to give an investor, entrepreneur, or business owner a tax cut because they are more likely to use their newfound wealth more prudently.
According to Prateek Agarwal at Intelligent Economist, supply-side economics is useful for lowering the natural rate of unemployment. Thomas Sowell, a supporter of supply-side economics, claims that while tax cuts are applied primarily to the wealthy, it is the working and middle classes who are the first and primary beneficiaries. This occurs because the wealthy, in Sowell’s view, are more likely to invest more money in their businesses which will provide jobs for the working class.
The purpose of economic policy is to facilitate the economic independence of their citizens by encouraging economic prosperity. Demand-side economics and supply-side economics represent two different approaches to achieving this endeavour. Demand-side economics argues that economic prosperity can be achieved by having the government increase demand by taking control of the economy. By contrast, supply-side economics, which is falsely denounced as “trickle-down economics” by the likes of people like Juice Media, champions the idea that the best way to achieve economic prosperity is by withdrawing, as far as humanly possible, government interference from the private sector of the economy. Supply-side economics is the economic philosophy of freedom, demand-side economics is not.
Conservatism is a strong force in American politics and society. It has helped shape and define America’s political and social landscape. This essay explores the concept and parameters of conservatism in America. It will conclude by stating that conservatism has had an impact on American society and politics and has affected the way in which America thinks about itself. The first paragraph will cover the history and philosophy surrounding conservatism. This will include the definition of conservatism, its influences, and beliefs. The second paragraph will explore conservatism in America, including its historical and political implications.
As a political ideology, conservatism has a complicated and ambiguous nature, encompassing a broad range of ideas, beliefs, and concepts. In terms of ideology, conservatives are well known for seeing change with weariness at best and complete disdain at worst. It is well known that many conservatives cling blindly to the past. It should be noted, however, that conservatives do not necessarily oppose all change. Conservatives oppose change which they see as threatening to the moral and social fabric of society. This is because conservatives which to protect society’s institutions, traditions, and moral framework.
According to Andy Stern, the former President of the Service Employees International Union, conservatives come with five characteristics. First, conservatives appreciate the need for fiscal balance. To this end, they are generally concerned about overspending, budget deficits, and so forth. Second, conservatives understand people’s romanticism with the concepts of hard work, personal responsibility, and see the Government as lacking understanding in this matter. Third, conservatives are suspicious of big government which they do not necessarily see as the solution to major problems. Fourth, conservatives are strong supporters of private sector growth which they see it as solving problems better than the Government. Fifth, conservatives are, likewise, strong supporters of small business.
Furthermore, conservatism comes with numerous advantages. Gary Jacobsen, a political scientist at the University of California, came up with several strengths of genuine conservatism. First, conservatives acknowledge materialisms role in encouraging particular forms of behaviour. To this end, conservatives are suspicious of bureaucracy which they see as stifling of this simple fact. Second, conservatives view with disdain the idea that social science theories can be applied to real-world problems. Third, conservatives value personal autonomy and freedom very highly. They realise that it is the individual that helps build and improve a society, not governments. Fourth, conservatives believe in good parenting having realised that good citizenry starts in the home. Fifth, conservatives believe in the superiority of the market system which they feel encourages more efficient use of resources. It would be foolish to place conservatism or conservatives into the category of simplicity. In fact, conservatism is a complicated political ideology with a history and philosophy more complex than may initially meet the eye.
Conservatism in America has had a long and varied history and impact on American society and politics. A series of essays known as the Federalist Papers, written between 1787 and 1788, serves as a strong influence of conservative thought in America. Federalist Ten by James Madison, for instance, was written to create awareness of the issues surrounding factionalism and insurrection in the union. In Madison’s own words: “no man is allowed to judge his own cause, because his interest would certainly bias his judgement and, not improbably, corrupt his integrity.” However, conservatism in America differs greatly from many other parts of the world. Because America is a relatively young country their conservatism is based on people’s personal values rather than on social class.
In fact, American conservatism is based on four distinct pillars. The first pillar is freedom based on the notions of “life, liberty, and the pursuit of happiness”, religious and economic liberty. The second pillar is tradition. As mentioned previously, conservatives are strong supporters oppose change which threatens the established social exoskeleton. The third pillar is the rule of law. The fourth pillar is a strong belief in God.
Politically, conservatism has had a strong influence on American society. Take conservative President Ronald Reagan, for example. In his eight years in office, between 1981 and 1989, Reagan strengthened the American economy by curbing inflation, stimulating economic growth, and increasing employment. He exempted many low-income people from paying income tax through his income tax reform.
Today, the Republican Party consists of a mix of libertarians, neoconservatives, and the Christian Right. As a result, these groups have become a powerful force in American politics. Conservatism in America is more value-based than ideological in nature. It represents who identify strongly with America’s philosophical past and view with suspicion any attempts to alter this system.
As a social and political force, conservatism has had a great impact on American politics and society. The first paragraph explored the history and philosophy surrounding conservatism as an ideology. In this paragraph, it was found that conservatism incorporates a broad range of ideas, beliefs and concepts, and that conservatives value society’s institutions, traditions, and moral framework. The second paragraph explored conservatism in America more specifically. It looked specifically at the history of American conservatism using Federalist Ten by James Madison as an example and discussed how American conservatism differs from conservatism in other parts of the globe. Finally, it focused on Ronald Reagan’s Presidency and the nature of conservative politics today. In conclusion, one would be hard-pressed to argue that conservatism has not had an impact on American. It could be argued that, to an extent, the very way in which Americans view themselves can be attributed, in part at least, to the influence conservatism has had.
- Alan Brinkley, ‘the Problem of American Conservatism”, the American Historical Review 99 no. 2 (April 1994), pp. 409 – 429
- Alfred S. Regerney, The Pillars of Modern American Conservatism (Spring 2012), First Principles ISI Web Journal, Delaware, available at: http://www.firstprinciplesjournal.com/articles.aspx?article=1813. [accessed 15/04/2015]
- David Barstow, ‘Tea Party Movement Lights Fuse for Rebellion on Right’, the New York Times, 15/2/2010
- Frank Freidel and Hugh Sidey, Ronald Reagan (2006), the White House, Washington D.C, available at: https://www.whitehouse.gov/1600/presidents/ronaldreagan [accessed 15/04/2015]
- James Madison, ‘The Federalist Ten: the Utility of the Union as a Safeguard against Domestic Faction and Insurrection (continued)’, Daily Advertiser, 22/11/1787
- John Mickelthwait and Adrian Wooldridge, ‘Introduction’ in, The Right Nation: Conservative Power in Amerce (Penguin, 2004)
- Liliana Mihut, ‘Two Faces of American Pluralism: Political and Religious’, Journal for the Study of Religions and Ideologies 11 no. 33 (Winter 2012), pp. 39 – 61
- Thomas B. Edsay, ‘What the Right Gets Right’, The New York Times: Campaign Stops: Strong Opinion on the 2012 Election, 15/1/2012
- Thomas Turnstall Allcock, ‘America’s Right: Anti-Establishment Conservatism from Goldwater to the Tea Party’, European Review of History: Revue Européenne d’Historie 21 no. 6 (2014), pp. 937 – 939
- Bradford Littlejohn, Three Things Conservatives Could Learn from Richard Hooker (February 2014), John Jay Institute: Center for a Just Society, available at: http://www.centerforajustsociety.org/three-things-conservatives-could-learn-from-richard-hooker/ [Accessed 15/04/2015]
- Wendy Dackson, ‘Richard Hooker and American Religious Liberty’, Journal of Church and State 41 No. 1 (1999), pp. 117 – 138
- Zelizer, J.E., 2010. Rethinking the History of American Conservatism. Reviews in American History. 38 (2), pp. 367 – 392
President Trump unleashed a new plan for tax reform in a speech at the Indianapolis State Fairgrounds on Wednesday.
The plans are the product of discussions between White House Treasury Secretary, Steve Mnuchin, the House Ways and Means Chairman, Kevin Brady, the Senate Finance Chairman, Orrin Hatch, House Speaker, Paul Ryan, Senate Majority Leader, Mitch McConnell, and White House economic policy chief, Gary Cohn. Their purpose will be to strengthen the middle class, grow the economy, and engender economic recovery by broadening the tax base, closing loopholes, and fostering growth.
According to a press release by the Treasury Department, the reforms will mean that less of the earnings of middle-class families will be subject to Federal income tax, and will reduce the number of tax brackets from seven to three: 12%, 25%, and 35%. It will also increase child tax credits and repeal the death tax and alternative minimum tax.
For business, the reforms seek to reduce the corporate tax rate to 20% and limit the taxation imposed on small and family-based businesses operating as sole proprietorships and small businesses corporations to 25%.
“This has been a long time coming. Instead of a source of pride, our tax code has become a constant source of frustration. It’s too big. It’s too complicated. It’s too expensive. Today, we are taking the next step to liberate America from our broken tax code.”
Similarly, the House Freedom Caucus, which is comprised of Congress’ most conservative members, said in a statement:
“President Trump has delivered a forward-looking tax reform framework that will let hard-working Americans keep more of their money, simplify our system, end carve-outs for special interests, and will help make our businesses competitive abroad. The Freedom Caucus looks forward to sending a final bill based on this framework to President Trump’s desk as soon as possible.”
The House of Lord’s Select Committee on Communications is conducting an inquiry into how the UK’s advertising industry can maintain its leading position in the world market.
According to a preliminary report released by the committee, advertising and marketing services contributed £13.3 billion to the UK economy in 2014, making it second only to the IT industry. Similarly, the Advertising Association has stated that advertising brings in £120 billion in economic activity to the UK.
The inquiry aims to address how the UK’s advertising industry can maintain its access to top level skills and talent. The Chairman of the committee, Lord Henley has stated:
“Advertising in the UK is a major contributor to economic growth and its services are now the UK’s third biggest export. According to one industry body, the industry generates a total of £120 billion in economic activity in the UK and provides 500,000 jobs.”
“However, the industry also faces major changes as advertisers switch from the traditional media of television, radio and print to digital—which now generates more advertising revenue in the UK than all other media.”
“With such a significant contribution to the UK’s economy, the Committee will examine how this industry can evolve and adapt to a changing market, and what role there is, if any, for the Government to help. The Committee will also explore ways the advertising industry can maintain access to a global talent pool and nurture the skills of those already in the UK.”
The committee has given all interested individuals and organisations until October 20th to submit written evidence to the inquiry. It will also hear oral evidence between September and December.
The committee intends to release a publication in early 2018.
The White House welcomed a hundred small business owners to participate in the “Engine of the American Dream” event on Tuesday. The event was designed to highlight small businesses and the role they play in the American economy. President Trump was joined by the administrator for Small Business Administration, Linda McMahon, and senior advisor, Ivanka Trump.
During his address, Trump highlighted his administration’s efforts to cut regulations, ease restrictions on energy, and cut taxes. He also thanked the small business owners for their hard work and for their contribution in growing the economy and creating jobs.
“You are the dreamers and innovators who are powering us into the future”, Trump told them, “that’s exactly what you are — and my administration will be there with you every step of the way.”
This event, and others like it (such as the ‘Made in America Week‘), symbolise an administration committed to helping business. Over August, conservative and business-aligned advocacy groups plan on spending millions boosting tax reform.
A briefing paper from the UK Parliament, entitled ‘Interest Rate Swaps on Business Loans‘, claims that the growth of individual complaints combined with increased media interest indicates that a financial scandal may be brewing. Its primary concern is over business loans with attached interest rate conditions.
These loans have proven to be very expensive when compared to the rest of the market. As a result, many business owners have claimed that the extraordinary economic backdrop and poorly understood and complicated financial contracts have left them paying exorbitantly high-interest rates. The report claims this has occurred due to a fall in interest rates following the financial crisis.
The economic indicators for July have revealed that the UK has experienced accelerated yet moderate growth, an increase in employment, and a faster growth of inflation than normal. Over the last financial quarter, the UK economy has grown by 0.3% whilst gross-domestic-product has grown for eighteen consecutive quarters.
The financial services authority is looking into this issue.