White House Lashes Out At IMF's Tax Reform Skepticism

Tyler Durden's picture

White House budget director Mike Mulvaney has come out swinging at The IMF, after the establishment-sponsored organization threw shade at Trump's tax reform plan's growth expectations, accusing them of wanting the reforms to fail.

The angry response came after Vitor Gaspar, The IMF’s head of fiscal affairs, told the Financial Times:

The idea that one would produce additional revenue by lowering tax rates is something that, being a conceptual possibility, is rarely documented empirically.

Asked about the IMF’s scepticism, The FT reports that Mr Mulvaney, previously a deficit hawk, said:

 “Yes, they are heavily invested in it not working out.” He drew a parallel with critics who challenge the growth-enhancing properties of Mr Trump’s deregulatory agenda.

 

“There are folks that are invested in seeing this fail because if it works then what is their argument for re-regulating? 

 

By the same token, if lowering tax does actually lead to growth, what is their argument going to be for raising taxes in the future?”

Mr Mulvaney does have a point and even Mr Gaspar admitted that it was not possible without full details of US tax plans to estimate the impact on tax revenues or growth.

“Policy has to be evidence based. One needs to study very carefully the particulars of the situation,” he said. But he added:

 

“The frequency of situations where tax cuts pay for themselves is low.”

But, we note, he still did offer an opinion, and additionally, The IMF showed its more truly progressive colors, supporting US ambitions to remove income tax deductions and close loopholes...

Better off individuals use tax loopholes much more than those who are not as well off, which means that progressivity, in practice, is much less than what you would have guessed based on tax rates alone,” Mr Gaspar said.

And thinks countries have to raise income-tax rates for top incomes without harming growth.

“We do not find systematic evidence that increasing tax progressivity hurts growth."

Apart from, hhmm, let's see, the last decade?

Notably, The Trump administration and The IMF have very different forecasts for the trajector of US public debt...

Given The IMF's terrible historical forecasting record, it's a coin toss at best over who is right.

As Mulvaney concludes, following derision from critics over the growth expectations,

"When I introduced the concept of 3 per cent growth in my budget in March I was laughed out of the room. We are there now..."

 

“We are trying to target our tax reforms at productivity, with the theory that maybe those types of reductions, those types of reforms, will lead to the GDP growth that the IMF says is impossible.”
 

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Cash2Riches's picture

Who honestly cares what the IMF or the FED think anymore? These are nothing more than globalist stooges, that want to not only see the US fail, but the entirety of the West.

GlassHouse101's picture

US creates IMF . .  IMF turns favor to China . . IMF destroys US (via the SDR). Any questions?

Kayman's picture

1. The other 188 countries that belong to the IMF love taxing the crap out of their citizens and hate competition.

2. China still pegs their puny currency to the USD, so letting China into the IMF is a sick joke- an embarrassment- even for the IMF stooges.

Syrin's picture

It's more basic than that.  Their ONLY concern is preservation of gov't funding.   That is NOT the purpose of gov't.   They should be concerned about maximizing the income of their CITIZENS and businesses, and tax cuts would absolutely do that.   Why doesn't anyone ever point this out?  The media and officials are only concerned about keeping Caesar's coffers full, fuck the people,

Escrava Isaura's picture

Syrin, It's more basic than that.  Their ONLY concern is preservation of gov't funding. They should be concerned about maximizing the income of their CITIZENS

Government is not an abstract entity. Government are people as well.

Second, you sound like a liberal which makes this website wrong for you.

Tax cuts won’t do jack shift to jobs. We need investments. And that money needs to be interest free.

 

assistedliving's picture

sick joke? 

2nd largest economy in the world; possibly overtake someone we know?

U may be embarassing yourself

quebecgold's picture

Trump is right on this one, less tax burden = higher economic growth

Washington Ed's picture

This may be true (or maybe not!) if fewer government services finance the lower taxes.  If higher debt burrdens finance it, then it's for sure not true.

Maybe it's just not true.

silverer's picture

The IMF. More experts. The kind that drink toxic CO2 in Coke and Pepsi, then tell everyone to reduce CO2.

OneStinkyDinky's picture

The best plan ... still don't know what's in it ... but we've beautiful index cards summarizing our dreams n wishes

small axe's picture

Withdraw from the IMF and appoint Ron Paul as Fed chair. Double dare you, Mr. President.

fbazzrea's picture

withdraw from the IMF and End the Fed!

Everybodys All American's picture

International Monetary Fund. Emphasis on International.

shizzledizzle's picture

"IMF, you're my nation bankrupter, and I love you. But don't ever take sides with anyone against the markets again. Ever." - Donnald

Kayman's picture

Way past time for the IMF to go fishing.

spastic_colon's picture

huh....funny how they "made" the QE experiment look so awesome.....I'm sure they can put lipstick on any pig they choose.

dearth vader's picture

Sure they can, but they put it on the wrong end of the pig.

jamesmmu's picture
Public Pensions – Biggest Financial Crisis Since the Great Depression?

http://investmentwatchblog.com/public-pensions-biggest-financial-crisis-...

Sizzurp's picture

Why is the argument always about the best ways to increase gov. revenue when we should be talking about how to let people keep more of what they earn by reducing taxes and gov. spending?

Kayman's picture

"Why is the argument always about the best ways to increase gov. revenue"

Because everyone that argues for more government is on the government payroll.

Smedley's Butler's picture

Hmmm... Lashing out at IMF.... very cool.

Carry on.

ElTerco's picture

Uhhh.... the Tax Reform plan as currently proposed is horrible. Just a fraction of Americans benefit, specifically those labelled as swamp creatures.

TabakLover's picture

It's ALL just a guess anyway..........  on EVERYTHING.

Mimir's picture

"The IMF, .... the establishment-sponsored organization"

You are referring to the US quota of $113 billion which Trumps government is garanteeing? 

abgary1's picture

The IMF is a group of self-serving socialist that couldn't find their asses with both hands never mind forecast the global economy!!!

ichan's picture

Fuckin "experts" are irrelevant. Go look in the mirror and shoot yourselves already.

falak pema's picture

When the Duck attacks the inner institutions of Pax Americana's pre-eminence over the past 70 years you know the empire is crumbling...

FBI, FED, IMF, nBC, CNN, GOP... what's next? 

ipso_facto's picture

Withdraw from the IMF and demand US $ back.

whatisthat's picture

I would observe there is perceived benefit to implement a single across-the-board income tax rate of 10% with no deductibles for individuals making 50,000. or greater, and shutdown or eliminate all useless tax regulations and regulators.

OliverAnd's picture

Ask a Greek about IMF's forcasting...  my 100 year old grandmother with little to no education can do a better job.