The Daily Signal - #484: How Trump's Tax Cuts Are Helping the Middle Class

Episode Date: June 16, 2019

On today's episode we feature an interview with Julio Gonzalez, chairman of Engineered Tax Services, and Stephen Moore, a distinguished visiting fellow at The Heritage Foundation. Gonzalez and Moore discuss the benefits of President Donald Trump’s tax cuts for the middle class and small businesses.We also share letters to the editor from our readers about Daily Signal reporter Fred Lucas' recent visit to the U.S.-Mexico border. Your letter could be featured on our show; write us at [e-mail] or call 202-608-6205.Plus, a good news story about the world’s tiniest surviving baby. Baby Saybie, the name the hospital staff gave the infant to protect her and the families identity, was born in December, at 23 weeks. This story reveals the value of each human life, no matter how small.The Daily Signal Podcast is available on the Ricochet Audio Network. You also can listen on Apple Podcasts, Google Play, or your favorite podcast app. All of our podcasts can be found at DailySignal.com/podcasts.Help us spread the word about The Daily Signal Podcast. Please give us a 5-star review and share this episode with your family and friends. That will help us make sure we are continuing to grow and reach more listeners.Enjoy the show! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Monday, June 17th. I'm Rob Lewy. And I'm Virginia Allen. Today we share our interview with Julio Gonzalez, chairman of engineered tax services, and Steve Moore, a distinguished visiting fellow at the Heritage Foundation. Julio and Steve discuss the benefits of President Trump's tax cuts.

We also have your letters to the editor, and Virginia brings us a good news story about the value of each human life, no matter how small. Before we begin, like to ask you to help us spread the word about the Daily Signal podcast. Please give us a five-star review on iTunes and share this episode with your family and friends. That will help us make sure we are continuing to grow and reach even more listeners. Stay tuned for today's show coming up next.

Today we are joined on the Daily Signal podcast by Julio Gonzalez, chairman of engineered tax services and Steve Moore, a distinguished visiting fellow at the Heritage Foundation. He's also the author of Trumponomics inside the America, plan to revive our economy. Julio and Steve, thanks for being with us. Thanks, Rob. I appreciate it.

Now, both of you have been strong advocates for the Tax Cuts and Jobs Act. You are people who are out there on the front lines defending tax cuts, defending tax reform. Tell us how you first connected and what that experience was first like is this law was coming into fruition. Well, I was asked by the administration to be on the private council to help with Congress and Senate and work through the tax reform. So I got to know Ryan and Brady pretty closely and just try to really look at the plan

and look at the unintended consequences to see, you know, what could be in there, what could fail, what, you know, because when you change thousands of pages of tax code, obviously you can have unintended consequences like we did in the 80s tax reform. So really, I was there to help give guidance. Yeah, look, I mean, first of all, thanks for your help on the tax bill. It was hugely important. Look, I think this was an incredibly productive bill. I think that the economic ramifications have been almost universally positive. We have the lowest unemployment rate now in 50 years for blacks, Hispanics, women, people are disabled, you know, people without a high school college degree. You know, the economy's grown at 3% now for the first time in 20 years.

So, you know, you look at just the actual results and they're uniformly positive. One of the things that I know Donald Trump is most proud of is that the wage gains that have happened as a consequence of this have actually gone. The biggest wage gains have been to the people at the lower income rungs of the economic scale. And so we've actually reduced income inequality because we've created a very tight labor force and that's given young workers a real opportunity to, you know, to expand their, you know, to low income workers now have an opportunity. to ask for higher wages. You have Democrats now calling for its repeal. At the same time, you have presidential candidates who are running for office trying to paint a completely different picture than the one you're talking about.

Do you think, given the benefits that we have seen in small businesses and the middle class, the Democrats will ultimately pay a price politically for their opposition? I think so, because when you're in business, the government's your partner. And that partnership was really adversarial for a decade. I mean, we couldn't grow our businesses because we gave over 50% of our profits back to the government. And you can't grow. You can't grow your employment. You can't grow your revenues when that partnership is so abusive.

And so we finally have a tax code now that allows small businesses to grow because we're able to retain some of our earnings and put that back into the companies and invest in our companies. So I don't see how anyone could see it really any other way. Yeah, so the highest tax rate on small businesses before the Trump tax cut at the federal level was 40%, just under 40, and we cut it to 30. And by the way, you know, smaller businesses also saw reduction in their rates. So, look, Republicans have done a poor job of explaining this and selling this message. I always say Republicans couldn't sell water in a desert. And, you know, so it's such a positive message on the economy, and yet they're having a hard time explaining to people connecting the dots. that this growth spur and the huge increase in employment and the big reduction in unemployment

rate. Well, look, we have seven million unfilled jobs today in America. Seven million. That's more than the entire state of population in terms of Indiana in terms of population. And it is a direct consequence of the tax cuts and the deregulation. And by the way, you said something, Julio, that's really important. You said, you know, that adversarial relationship between government and business was holding back business investment. And I 100% agree with that.

I mean, the Obama people were adversarial. They regarded business as the enemy. I mean, remember, it was Barack Obama and said, you didn't build that. You know, and that was this kind of contempt that I think the previous administration had for business. You know, Donald Trump is unapologetically pro-business. And I like that because, you know, you can't have jobs without businesses. How much do you all credit President Trump's tax cuts for the uptick in new jobs? Huge. Although, look, the tax, you know, it's a part of a whole program. I mean, I see it as three things that Trump has done concretely that have changed the economic environment. One is the tax cut. The second is the deregulation, which might actually be even bigger. And the third is the pro-American energy policy, you know, allowing America to produce more oil and gas and coal and those resources that have made us the number one energy powerhouse in the world. I don't know about you, Julio, but my view is that it's a lot of it, though, is businesses,

You could see the shot up in small business confidence right after Trump was elected before he actually did anything. Because I think for the first time, businesses felt, again, it gets to your point about adversarial that finally he had an ally in the White House, not somebody who was trying to come after successful businesses with the billy club. I don't know if you would agree with that, you know, outlook. The confidence has been strong. Yep. You know, peer-to-peer, CEO-to-C-O relationships, everyone. the confidence has just been so strong that there not only is deregulation, lower income tax rates, immediate expensing, those are all big things.

But it's that confidence that Steve's saying that allows us to go out there and grow our companies and invest knowing that we have a very robust economy growing under this tax benefits. Julio, you are somebody who's a tax policy expert. You've been working behind the scenes, but you're also very active on social media. why is it important to you to be out there in the public forum making the case? I think Steve just said it. We, the Republicans do a poor job of promoting all these great things that we've done. And, you know, we allow the liberals to talk about certain pieces of this tax code.

Let's give an example. They don't like that we took away the salt, the state and local tax deductions, right? We capped it at $10,000. And they hit on that. all the time, right? But if they even knew the tax code prior to that, anyone that was paying over $10,000 and staying local taxes didn't get the benefit because they were phased out by AMT. So you got all these people in an uproar, but they probably never even looked at their tax return. They probably thought they wrote it off. I guarantee you, they probably didn't write it off.

So now they're getting a $10,000 benefit. But here you have all these states saying, oh, this is horrible, this is crazy. They didn't get it anyway. That's such a great point, you know, because what we did, I mean, you're right, people don't really understand, you know, how would they? Because people don't pay that close attention to tax law. 90% of almost 90% of taxpayers don't have to have to itemize their deduction any longer because we doubled the standard deduction. So those kinds of write-offs that Washington loves because they love a complicated system, you know, and those all went away. So 90% of Americans are actually better off because what we did with changing the deductions. And it's only the irony of this issue, by the way.

is the people who actually do get hit hard by getting rid of the state and local tax deduction are the people in the top 1% of income. You know, and here you have the liberals. So you get the irony here. Liberals are actually trying to bring back a tax shelter for the millionaires and billionaires. And I say, no, we're not going to bring back tax shelters. We want low rates and abroad base. They want to bring back all the deductions and loopholes and have high rates. And I think most Americans understand which system works better.

As you all have advocated for tax cuts, are there any personal stories throughout America that really helped to tell the story of their positive impact? I have one. So the last chapter of my book, Trumponomics, thank you for mentioning, is called A Light Switch is Flicked from Off Don. And that came from a gentleman I met in Cleveland, Ohio, wherever I go, because I travel all the time, I ask businessmen, small or large, you know, how's business? How are things going? And this was about, you know, a year after the election, and we had just passed the tax cut. And this guy, Joey, who runs an auto mechanic shop, said, I said, how's business going, Joey? And he has about 20 employees.

He said, Steve, it's almost like a light switch was flicked from off to on the day after the election. And he said, ever since then, I've had more business than I can handle. That's sort of the unleashing of the animal spirits of the economy. But I get that all of the time. All of the time, you know, people just say, boy, there's this new confidence. And, you know, the tax cut has helped my business. I can invest more. And, you know, I can hire an additional worker.

I can purchase another truck and all of these things. Because don't forget, one of the things you know, Julio, we did in that bill was we allowed businesses to immediately expense their capital purchases. So if they wanted to, you know, purchase a new computer or build a new plant or a new truck or something, they could write it off. And we've seen a big explosion of capital investment as a result. It's wonderful. I'll give you an example in Ohio as well. So I had a client in Toledo, Ohio, which Toledo had basically become a ghost town under the last administration. And this company at one time was at 100 employees.

They built post for construction sites. They were down to 18 people. And as of two weeks ago, they're almost back to 100 people. Wow. Wow. Toledo is not such a ghost town anymore. They're back. They're vibrant. People are being employed back in Toledo again.

And another example where people are getting jobs back that they didn't have. And this is so wonderful to see up there. Steve, you along with Art Laffer and Jonathan Williams, author a great book each year called Rich States Poor States. What kind of an impact the tax policies have on states? We heard some personal stories here about Ohio. But can you share with us about what is meant for other states in terms of maybe job creation or where businesses or people are moving? Well, two quick points. I mean, one is our research and data are pretty unequivocal on this, that the states with low taxes, especially the nine states that have no income tax, states like your home state of Florida, like Texas, like Tennessee, New Hampshire, Washington State, they are just clobbering the states with high taxes. I talk a lot about the four states of the apocalypse, and those are New York and I get New Jersey and Illinois. They're a financial disaster. And by the way, they have the highest taxes. And yet they have the biggest fiscal holes. So I think what the states teach us is that you can't tax your way to prosperity and that sound tax reform with low taxes

and broadbates is the way to prosperity. But you live in one of those states with no income tax. It's a huge advantage. Huge advantage. And just to build on that, and you could add California to that category as well. New York, California, Illinois, this year alone is added 84 taxes to their state tax system, taxing soda, taxing additional on golf course. outdoor dining. Not golf courses. Yeah, outdoor dining. Outdoor dining, right?

It's just, look, if you, I Google tax every day. Go figure, right? And every day these states are doing a new tax because they're two, three, four billion behind in collections already for this year because everyone's mass exodus. Why would you pay those taxes? And then the other ones that they're bringing aboard. But you're right, you can't tax to, you know, this. Well, Julio, thanks a lot because I am from Illinois.

I hail from the Chicago area. And it's a total disaster. And everywhere I go, you know, whether I go to Florida or Texas or Utah or, you know, Arizona, all I see is Illinois license plates of people who have left. And, you know, Illinois now is actually getting under their new governor, Pritzker. They want to get rid of their flat rate income tax, which would be a complete disaster. They want to raise their highest income tax rate to 8 to 9 percent. They don't understand basic math.

The 8 or 9 percent of zero is zero. And you're just going to get all these rich people who are going to move out. They're not going to get any income at all from those people. But, Steve, as you said, the data shows. So when are the political leaders in these states going to wake up and recognize that there is a mass exodus, leaving California, leaving Illinois, leaving other states like that? I don't know. I mean, I've been talking about this for, you know, 15 or 20 years. You know, Connecticut and New Jersey and Illinois are just losing their greatest assets, which is their people and their businesses.

And, you know, there was a famous story of a billionaire who finally left Connecticut. and moved, I think, to Florida. And just by him leaving, he put a $50 million hole in the state budget. Wow. They're like, come back. Come back. And he's like, cut your taxes and I'll come back. Well, here in Washington, D.C.

And, you know, across the presidential campaign trail, proposals like the Green New Deal and the $15 minimum wage are getting a lot of buzz. What would they actually mean for Americans? Well, I think those kind of things mean that we're going to have to cut our employees. I mean, you know, we got to be competitive. We got to be able to, you know, bring people in at a wage where we can go out and promote and sell. And as you force the system on companies, it doesn't work. We'll lose jobs. I agree with that.

And look, I want the highest wages for American workers we possibly get. You know, and Donald Trump does too. I mean, he'd always say, how is this going to affect middle class workers? He understands that, you know, he's the blue-collar precedent. He's the one who cares about those factory workers and the steel workers and the auto workers. And, you know, I think one of the lessons we've learned from Trump is, you know, the best way to raise wages is not through government minimum wages. I mean, Target just raised their wage rate to, what, $11, $12, $13 an hour. Walgreens has raised their wage rates.

FedEx is offering bonuses for people. You know, you see this Costco, all of these. major companies are raising their wages. And you ask them why you're raising their wages. And what Target said is we have to raise our wages because if we want to retain and recruit workers, it's a competitive environment out there. When you've got seven million unfilled jobs, that gives workers an opportunity to bargain up their wages. And so that's the positive aspect of this. But when you raise the minimum wage, you know, that hurts. And by the way, why should Mississippi have the same wage rate as California? That's just crazy. You'll put all the people in Mississippi, you

know, out of work. And of course, maybe that's what California, New York want. Yeah. And like what Steve said earlier, what, we have low, the lowest unemployment, right? We have to pay more to get employees. Right. I'm having to pay more. Have you had to do that? I have to have to attract people. We have to raise it to keep our people. Great economy. Low unemployment. Best way to bring up the wages. Finally, I want to ask both of you, aside from tax reform and deregulation, which we've talked about, What other policies would you like to see from the Trump administration to really boost the economic growth here in the United States? Well, you know, from a business standpoint, I know this is maybe an impossible wish, but I'd love to see tort reform at some point. You know, because as a business, you know, especially if you employ in California, you know, those employees can walk out.

They can abandon their jobs and go to an attorney and you have no choice but to settle. I mean, for business, I think tort reform would really go a long way, but maybe Steve has some better things. That's a good one. You know, good luck with that, taking on the trial lawyers. But I got speed on that. No, I'm just joking. But you're right. That's a huge issue for American businesses.

I'll just say this, you know, I support what Trump is doing on China. We're in a big trade, you know, dispute obviously with China. I would love to see Trump. And this is something Larry Kudlow, the chief economist for Trump has mentioned, is, you know, I'd love for Trump to continue to pursue this idea of we'll go to zero. on our tariffs if these other countries go to zero on theirs because we actually have the lowest tariffs and that would, you know, wouldn't that be something, Rob? Because then we would actually have, you know, Donald Trump would give us, you know, more free trade because every country would have an incentive to lower their tariffs. I will say this. If Trump can get this trade deal

done with China and everything Trump is asking for is very reasonable with respect to China, you think the economy's strong now. Wait till he gets a trade deal done with China. Then I think we're looking at, you know, three to four percent rates of economic growth. And, you know, Larry Summers, who was the chief economist for both Barack Obama and Bill Clinton, will be kind of, you know, pulling his hair out because he was the one who said, you know, after eight years of Obama, the economy can't grow more than 2 percent. We're already at 3 and a quarter percent, and I think we can actually get up to 4. And when I tell Trump that, he'd always say, I want five.

I want five percent growth. I love his optimism, by the way. It's great. It really is great. Julio, a very important final question. How can our listeners follow you on Twitter? Oh, well, on Twitter, I'm tax reform expert. Perfect.

And I try to post every day these states coming up with new state taxes every morning to drive the people out. So just trying to keep everyone informed out there. Well, and you can follow Steve Moore at Stephen Moore. And please pick up his book, Trumponomics. It's great to have you both on the Daily Signal podcast. Thanks for being with us today. Thank you guys. My pleasure.

Thanks. If you're tired of high taxes, fewer health care choices, and bigger and bigger government, it's time to partner with the most impactful conservative organization in America. We're the Heritage Foundation, and we're committed to solving the issues America faces. Together, we'll fight back against the rising tide of homegrown socialism, and we'll fight for conservative solutions that are making families more free and more prosperous. but we can't do it without you. Please join us at heritage.org.

Thanks for sending us your letters to the editor. Each Monday, we feature our favorites on this show and in our morning bell email newsletter. Virginia, who's up first? In response to Han Von Spikoski's article, will Trump be impeached? Here's everything you need to know about the process. Don writes,

there needs to be a real justification to an impeachment of any elected official. Trump does have a boisterous and loud personality, but that is an insufficient reason to impeach or oppose him. Trump's policies do work for the most part. The Democrats should be working toward democratic legislation rather than all these wasted and seditious investigations. Nitpicking is contrary to good governance.

And Virginia Vincent writes, Dear Daily Signal, I am 81 years old and have witnessed many changes over many years, including times of no drug cartels, no murder, and no drug problems. People who reocated to our country became our friends. We have turned into a nation of distrust for the very reasons Fred Lucas

has reported in his article about the border crisis. I worked with Mexicans whom I easily can compliment for their work ethic. My deep respect for border patrol officers is not limited. I support the border wall, but the number of illegals

presently in our country will never be resolved until a system is developed under which legal immigrants are welcomed. Your letter could be featured on next week's show. Send an email to Letters at dailysignal.com or leave a voicemail message at 202-608-6205. Are you looking for quick conservative policy solutions to current issues?

Sign up for Heritage's weekly newsletter, The Agenda. In the agenda, you will learn what issues Heritage Scholars on Capitol Hill are working on, what position conservatives are taking, and links to our in-depth research. The agenda also provides information on important events happening here at Heritage that you can watch online as well as media interviews from our experts. Sign up for the agenda on heritage.org today. Virginia, you have a good news story to share with us today.

Tell us about it. Thank you, Rob. Recently, a hospital in San Diego announced the birth of the world's tiniest surviving baby. Baby Sabie, the name the hospital staff, gave the infant to protect her and her family's identity, was born this past December at just 23 weeks. Most babies are delivered at 40 weeks. Sabie only weighed 8.6 ounces when she was born. That's just over half a pound.

Sabie's mother had not been feeling well, and after a trip to the hospital, she found out that she had reclampsia, a medical condition causing high blood pressure during pregnancy. An emergency C-section was necessary for her survival. I just felt very uncomfortable and I thought maybe this is part of the pregnancy. They told me that I had preclimia. My blood pressure was very, very high, over 200, and they had to deliver her really quick. And I kept telling them that she's not going to survive. She's only 23 weeks.

Sabie's parents were told that their daughter would not survive for more than one hour. They told my husband that he had about an accident. hour with her and that she was going to pass away. But that hour turned into two hours, which turned into a day, which turned a week. Sayby went home a couple weeks ago, a healthy five-month-old baby. Doctors and nurses are calling her a miracle baby. I just wanted her to know how strong she is and how, I mean, if she can start off where she was and do as well as she can be, there's nothing if she can't do. Sabie's story reminds me and I hope others of just how precious each little life is and that every life is worth fighting for. Thanks for sharing that story, Virginia.

Very heartwarming. Yeah, it really is. It's my pleasure, Rob. Thank you. Well, we're going to leave it there for today. The Daily Signal podcast comes to you from the Robert H. Bruce Radio Studio at the Heritage Foundation. You can find it on the Rurkishay Audio Network, along with our other podcasts. All our shows can be found at DailySignal.com slash podcast.

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