White House Lashes Out At IMF's Tax Reform Skepticism

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.”
 

Comments

Syrin Kayman Wed, 10/11/2017 - 14:27 Permalink

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,

In reply to by Kayman

Escrava Isaura Syrin Wed, 10/11/2017 - 15:33 Permalink

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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.  

In reply to by Syrin

Sizzurp Wed, 10/11/2017 - 13:53 Permalink

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?

ElTerco Wed, 10/11/2017 - 14:15 Permalink

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

Mimir Wed, 10/11/2017 - 14:45 Permalink

"The IMF, .... the establishment-sponsored organization"You are referring to the US quota of $113 billion which Trumps government is garanteeing? 

abgary1 Wed, 10/11/2017 - 15:09 Permalink

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

falak pema Wed, 10/11/2017 - 15:14 Permalink

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? 

whatisthat Wed, 10/11/2017 - 20:43 Permalink

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.