The US Senate votes for tax cuts

The Republicans cleared a big hurdle this week with the Senate voting for a sweeping tax reform with substantial tax cuts for individuals and companies.
It is true the Senate Bill and the House Bill still need to be reconciled, because there are differences between them. There could still be last minute problems which stalled the policy. However, the Senate vote and the House rhetoric implies that they do think they need to pull this off. The Republicans could ill afford a failure on tax reform after their public inability to agree reform of Obamacare. They need something to show for their year’s debates. They are more likely to keep their majority in the mid term elections if they can show solid achievement.

The tax reform is also more likely to win them friends and voter support than the healthcare reform which divided the nation as Obamacare itself did. Whilst it is true some of the polling on the tax cuts themselves is not great, there will be huge support for measures which boost growth and take home pay. Voters often tell pollsters they do not in aggregate want tax cuts,especially if they think the cuts go to companies and people richer than themselves. They also tell politicians in the ballot box that if the politicians vote to put their taxes up or fail to support tax cuts they will vote for someone else instead. People may not welcome large company tax cuts, but they will welcome more investment, more jobs and better pay from companies that retain more of their profits, and they will like the boost to pension funds and other savings vehicles from a stronger corporate sector.

This large tax reform is a game changer. It is a substantial fiscal stimulus to the US economy as conventionally defined, with a costed $1.4 tn of giveaways over ten years. The US may end up collecting more tax than forecast as the rates are cut, as official forecasters often underestimate the dynamic positive effects on turnover and revenue from lower rates. The idea of persuading more companies to repatriate profits and cash to the US with a lower rate could also work, giving US companies much more money at home to invest to grow their US businesses.

There will be beneficial effects for the rest of the world economy as the growth rate of the world’s largest economy accelerates. The rest of the world needs also to understand that with these tax changes the US will get more competitive, and will become a relatively more attractive place for investment.


  1. Lifelogic
    December 3, 2017

    Oh for some sensible tax levels here and indeed a sensible, non green crap, energy policy. Also some well directed and large deregulation.

    Trump is certainly right on these issues. May as usual is totally wrong. You push ahead dear with more Muslim schools, your gender pay gap lie and reporting and your attacks on the gig economy.

    Instead we have May, Rudd, Javid and the rest attacking Trump for re-tweeting three real videos of events that actually happened.

    Could we perhaps have a sensible IHT threashold say about £4 million each like the US? Or perhaps at least they could give us the £1 million that the Tories promised years ago and Osborne and Hammond have ratted on.

    Lower taxes, cheap on demand energy, a far smaller state and massive deregulation is all that the UK needs. It seems that May and Hammond must go inorder to get this.

    We have had enough of Corbyn light.

    1. jerry
      December 3, 2017

      @LL: We have had enough of Corbyn light.

      You might, but the opinion polls suggest otherwise [1], perhaps that is why Jeremy Hunt issued a warning during his interview on ITV’s Peston on Sunday programme.

      It all rather suggests that if Mrs May’s own MPs are not prepared to back her she might well be threatening to “do a Ted Heath”, not a John Major. Some Brexiteers appear to playing a very high stakes game, all they want or no Brexit for the moment, if ever!…

      [1] would Brexit survive if Labour, as the largest party, end up forming the next Government, supported by the SNP and other Europhile parties?

  2. Prigger
    December 3, 2017

    The bill nearly doubles the standard deduction level to $12,000 for individuals (up from $6,350) and $24,000 for couples (up from $12,700). A massive improvement for everyone. Not as good as ours. They have other sneaky federal taxes too like ours such as Council Tax, NI tax, VAT etc .
    It is hard to calculate just what it all means. But my landlord told me after visiting America before the tax cuts, he was personally very angry when he met a long distance lorry driver ( trucker ) who used a tractor to cut his lawn whereas he himself could only afford a hand-held electric strimmer and did not have a garden large enough to use a tractor..also that the trucker’s cab was nearly as big as some of the bedsits he rented out.
    So I guess it’s swings and roundabouts, strimmers and tractors.

  3. Lifelogic
    December 3, 2017

    Then we have her Social Mobiliy Tzar resigning, good close the department down and give tax cuts which would do far more good.

    PLUS WE have Sir Richard Aitkens telling May her proposed “compromise” over the ECJ is dangerous. Indeed and very stupid economically and politically too.

    Oh for a working compass for the poor, daft as a brush, woman and her silly neighbour, tax ’till the pips squeek (and the economy dies) Hammond.

    1. Hope
      December 3, 2017

      Good riddance. What did this a quango actually achieve in real substantive terms, other then lining their own pockets with undeserved wages? Why is this not under the remit of the Equality minister? Cameron appointed this pro EU Blairite and former Labour minister to a quango that he promised to set on fire!

      Odonis needs to be sacked for acting contrary to Govt policy. Another Cameron appointment of a pro EU Blairite and former Labour minister! Another unnecessary quango where the work should be carried out by Grayling’s Transport department!

      Let us have this bonfire of quangos and rid the public sector from the pro EU socialist infection.

  4. Fedupsoutherner
    December 3, 2017

    Trump always said he would bring taxes down and put America first. He has been trying to run the his country with his hands tied behind his back. People from all sides want him to fail including it would seem, our government aided and abetted by the BBC. I wish him all the luck needed to get their country back on track. What a shame Mrs May seems intent of making the UK an enemy when we need good relations with a major economy right now more than ever. With her twittering she is destroying any ‘special’ relationship we might have had. What a disaster she is turning out to be and an embarrassment. This country is turning into a laughing stock internationally and closer to home.

    1. Fedupsoutherner
      December 3, 2017

      John, any particular reason my comment is still awaiting moderation when I posted very early this morning? I have posted nothing controversial.

    2. Timaction
      December 3, 2017


  5. Gold Mousetrap
    December 3, 2017

    $1.4 tn cost is expected to be easily recouped over the next ten years as it amounts to but a percentage point on GDP. But there is just over 20 trillion in debt already. Even so, the huge amount of money entering the economy from tax cuts to corporations and individuals, increased child benefits possibly from as early as January 1st 2018 and the distinct possibility that billions, even trillions of dollars will be repatriated back to the USA in a matter of months as a one-off low tax return will send the US economy skyrocketing. But not ours so much unless we sack the negotiators wishing for us to stay in the EU another few years and not make our own trade deals.
    It is little wonder the EU is desperate to hold us in its clutches. 325 million Americans plus another 66 million Brits working in cooperation with 37 million Canadians, 24 million Australians and 5 million New Zealanders is not something th EU wants especially since the USA is the largest importer of EU agricultural goods amongst other stuff.

  6. Miss Brandreth-Jones
    December 3, 2017

    The connections between the US and the UK in all likelihood should become stronger with bi Atlantic growth being a positive outcome.
    From your input this am a sad truth reveals itself .Money matters are more important than health matters. Obamacare was a change for the better, however wealth matters more.

    1. sm
      December 3, 2017

      And how would you pay for the vast expenditure on health matters….with a shopping bag of carrots from your back garden or soap bubbles?

      1. Miss Brandreth-Jones
        December 3, 2017

        silly comment.

  7. Olive Twister
    December 3, 2017

    You would have expected our media to have done a breakdown of “How these tax changes affect YOU” as if you were an American. Well that would lead to a prolonged exodus from here, not a brain drain as there are too few us left here with brains to constitute more than a few triggers of a kid’s water pistol.

    The tax cuts are interesting in their detail apart from a huge cut in Corporation Tax. They feed into gifts to mortgage payers, yes and health care provision and usage… and there are likely to be more gifts to lower paid before it is actually enacted. I’d emigrate now but someday the Democratic Party will get back into power and rob me blind of everything I might have gained. They are like Corbynistas but with an education.

  8. formula57
    December 3, 2017

    There are however troubling aspects to these tax plans locally, not least that tax take would increase (under the Senate version) from all income groups earning less than $75,000 (per the congressional Joint Committee on Taxation). With state and local taxes ceasing to be deductibles under Federal assessment, those tiers of government may be induced to restrain spending. Accordingly, increased demand may not see the boost that might be expected and social problems may become more acute as wealth continues to accrue to the one percent..

  9. Gopher
    December 3, 2017

    UK Social Mobility Commission? Now the head of it has resigned, perhaps it should be closed down altogether whatever it might do, could do, I haven’t heard about it until the steering wheel has seemingly dropped off and no-one can find it or even knows what it looked like.

    1. sm
      December 3, 2017

      The head of the Commission being Alan Milburn, former Labour MP, who closed down the Community Health Councils when Health Secretary, with explanation or excuse, thereby rendering complaints to and about the NHS vastly more complex and vastly less effective.

      1. sm
        December 3, 2017

        sorry, that should be ‘withOUT explanation or excuse’

        1. Gopher
          December 3, 2017

          I recall only Mr Milburn’s name and an old photo of him. I saw him on the Marr show and didn’t recognise him or his voice. Maybe he’s a very nice chap! But I really do not understand why a Commission needs to be in existence researching Social Mobility. When I look back to the council house street where I was born in deepest coalmining country, everyone of the kids I met later or their friends and relatives said they went in all kinds of directions. Four five or more to various universities. others into being engineers, coalminers, plumbers, electricians . One became a banker! One or two emigrated to Oz . Two more went into the army.Three died young. One became a lorry driver. Almost all moved out of the area through marriage or jobs. Half went to Grammar School, not me.
          You could learn in the local tech, in jobs, or learn at home and later through Open University .
          Haven’t a clue why you need a Commission unless you are not Yorkshire. We can help ourselves. We do. Did. Still doing.

    2. Lifelogic
      December 3, 2017

      Like so much of government closing it down and lowering taxes would do far more for Jobs, social mobility and the economy.

    3. Hope
      December 3, 2017

      A Blairite pro EU former Labour minister resigns. Good. Should never have been appointed by Cameron. Bonfire of quangos, we have an Equalities minister this should be in the remit of that office. Not establishment jobs for former Labour ministers infesting socialism.

      JR spot on. Lower taxes, we pay far too much. Last person to revolutionize tax was Thatcher and it changed our economic fortunes. Taxing until pips are squeeked did not work under Labour. The U.K. Needs to free itself from the EU and take whatever action to maximize business and growth. Reports EU will demand tax rates are comparative with EU if we want to trade! Comply with its rules etc. The EU is still telling our country what it can or cannot do. Bad deal, walk away. Survey shows overwhelmingly we the public do not want to pay the black mail divorce bill. Again, walk away, no freedom of movement either under sham registration. As you suggested the Irish border can be solved, if the EU or Ireland wants a border up to them. No more of this conceding nonsense under guise of compromise. No.

      Good letter to make red lines. ECJ means no control of our borders or laws effecting them in every aspect of their lives! It is not a compromise but another cave in to keep us in the EU. We voted leave, no four pillars at all.

      Reports the U.K. Asking and being prepared to pay to be in EU aerospace safety! Governed by ECJ. No.

    4. Denis Cooper
      December 3, 2017

      As I understand his term was coming to an end, he was not going to be automatically reappointed as perhaps he had wished, and he didn’t want to reapply; so he took the opportunity to blame a Tory Prime Minister even though Labour had not solved the problems during thirteen years of government, and of course blame Brexit.

      1. rose
        December 4, 2017

        Also, there were only four members where you might expect a dozen or so. This commission looks as if it was being run down.

  10. Jonathan
    December 3, 2017

    People may complain about companies getting tax cuts but the stimulation to jobs is well documented. Many international companies have decided to take jobs out, or not to create jobs, in the UK due to the high cost of employing someone.

    1. Lifelogic
      December 3, 2017

      The high costs in the UK and the absurd employment red tape and risks. May wants even more!

    2. Anonymous
      December 3, 2017

      Then clearly the stimulation to wages is not good then.

      We expect a certain standard of living in Britain. When employers fail to provide it the government steps in with top-ups.

      It seems unfair that international companies should avoid paying tax to the system that helps them thrive – especially where they demand we stay in the EU borders for its ‘cheap’ workforce, which gets subsidised by the UK state too.

  11. Mark B
    December 3, 2017

    Good morning

    Good news for the U.S., not so good news for the RoI and other tax havens.

    The U.S. is the UK’s largest market but, it seems the economically illiterate and unbusiness friendly PM would much like to upset the POTUS and its people via Twatter and endanger trade, then privately and through recognised official channels, make her feelings known.

    Not this is a significant event and one hope that one day we too will once again that wants to put money ‘working’ people’s pockets and not other people’s begging bowls. Whether they be on benefits, charities, nations or supranational and international bodies.

    It is time to look after those who look after YOU !

    1. Johnny Englander
      December 3, 2017

      It would be a mistake of the first order to assume that the POTUS is a friend of the UK. A friend would not have (a) re-tweeted a set of incendiary videos in the first place and (b) publicly attacked the PM when she responded to his action in the only way possible. The PM’s political career would have come to an abrupt end had she failed to deliver a sharp public response to a blatant demonstration of support for (such an ed) organisation within the UK, and the President would have known that – but he did it anyway.

      The President cares not one jot whom he offends, nor what the consequences of causing such an offence might be. He has demonstrated this repeatedly both before and since taking office, and he shows no sign of changing that attitude. We should bear that in mind when we go running to the United States looking for preferential trade deals after we leave the EU.

      1. APL
        December 3, 2017

        Johnny Englander: “(a) re-tweeted a set of incendiary videos in the first place”

        Your criticism is that the videos were incendiary, rather than they were untrue?

        We saw videos of the London Bridge massacre on the BBC, were those incendiary or untrue?

        1. Johnny Englander
          December 3, 2017

          APL – my criticism is that the President’s re-tweeting of the videos was counterproductive in the extreme, given that the reaction in the UK to his doing so was 100% predictable. Turn the situation round: would the Prime Minister of Great Britain post a tweet making it clear to several million followers – including a lot of Americans – that she considers the United States to be a hotbed of violence and lawlessness, and that the President would do well to spend more of his time trying to control it?

          There are ways to make one’s displeasure at the actions – or lack of them – of one’s allies known, and they’ve been used for centuries. Posting them on Twitter isn’t one of them.

          1. APL
            December 4, 2017

            Johnny Englander: “given that the reaction in the UK to his doing so was 100% predictable. ”

            I’d qualify that with the following. Given that the reaction in the UK of those with a State sponsored platform to shout about his doing so was 100% predictable, … after which I would agree with you.

            But in my opinion the reactions of those commentators in the BBC has long been discredited, likewise, C4, Jon Snow & Co., and simply act as a yardstick to measure how correct the sentiments they criticise are.

            Generally, the rightness or otherwise of a given sentiment is inversely proportional to the outrage and spleen expended by the BBC, C4 and so on.

      2. rose
        December 4, 2017

        The President is entitled to make use of any material on the internet that is legal. Raucous outbursts from our PM and Home Secretary, insisting that he was WRONG, are extremely ill-judged. The PM has now done this three times since he became President, and each time there has been no justification whatever, other than her wish to ingratiate herself with people who are never going to vote for her anyway.

        His reply to her was not an attack but a simple piece of well meant advice. He is the leader of the Free World and he is trying to keep it free. That includes Western Europe. He is trying to get the Western European leaders to stop burying their heads in he sand, and he is trying to get his own people to understand what is happening.

        1. APL
          December 6, 2017

          Rose: “our PM and Home Secretary, insisting that he was WRONG, are extremely ill-judged”

          She now seems to want a veto on the choice of city a foreign power chooses to site its embassy.

          Perhaps Teresa May ought to just shut up, and run for President of the United States in 2020.

          At least we’d be shot of her.

    2. Anonymous
      December 3, 2017

      Trump is usually right – if tactless and undiplomatic.

      I can forsee him getting a second term so it’s important we do not become enemies.

      etc ed

      1. Anonymous
        December 3, 2017

        Edited for my own protection for mentioning the content of the tweeted videos.

        If *they* hadn’t done it then I wouldn’t have been able to describe it !

        Like Trump I am not the bad guy either. He is right and the western Left is contorting itself beyond the bounds of sanity – then airbrushing the truth for reasons of correctness.

        Obviously the proles are too simple to see the big picture.


        The closest next best thing to Brexit is open defiance of the public and the admission that we do not actually live in a democracy anymore.

        That will do.

        1. APL
          December 4, 2017

          Anon: ” .. and the western Left is contorting itself .. ”

          Aided and abetted by people claiming to be Conservatives. But all they are doing is self censoring, in the hope the Left won’t notice them.

          Utterly spineless!

    3. bigneil
      December 3, 2017

      While the govt keeps waving in very expensive people to have free lives on the UK taxpayer, there never will be any more cash put in the “working people’s” pockets. The bill for the new arrivals has to come from somewhere, and while they can have as good a life ( for getting here and doing nothing ) as the people down the ladder (who have to work ) then they will keep coming and the bill will keep rising. Cuts to the Police, Armed Forces and council services, year after year. etc ed

    4. Derek Henry
      December 3, 2017


      What on earth are you on about you don’t look after Mr Redwood.

      You think we still use the gold standard. I’m sorry but we don’t and haven’t for decades now.

      Your taxes pay for nothing not a god damn thing. Sure they did when we used the gold standard. they paid for everything.

      Today taxes and bond sales destroy high powered money and to help control inflation. The more taxes we collect the more we can spend without creating inflation. Taxes take currency out of the economy and destroys it.

      Taxes fund nothing you just need to analyse your own spending chains to see the truth. Your spending is someone elses income and they pay tax and the chain goes on right around the economy. Your taxes are destroyed at the BOE during the overnight interbank markets.

      The BOE used to burn your taxes now they shred them. Just walk up to Threadneedle street and try and pay your taxes. They have no use for your £’s.

      You should ask yourself where do you get your £’s from that then allows you to pay your taxes in the first place. Then you might actually see the smoke and mirror con trick for what it is.

      HM Treasury funds Mr Redwood not you. You fund no public service.

      1. ian wragg
        December 3, 2017

        I think you are talking rubbish. I read somewhere that an American proposed this theory in about 1942 and it has been widely discredited.
        Taxes go to treasury accounts and monies equivalent are allocated to different departments.
        We are not Zimbabwe.

        1. Derek Henry
          December 4, 2017

          Why not study the acccounting between the central bank and the treasury then.

          You’ll soon realise what is true and what is not.

          I’ve only studied it all for the last 6 years in great detail. My guess is you’ve not looked at it all once.

      2. Mark B
        December 3, 2017

        Nice post.

        So how does bartering work then ? Because if 10 chickens is worth one pig then how does the government get its share ?

        For money to have worth, it must have people to believe in it. It must have some notional value. It is used as an alternate means of exchange to the aforementioned bartering, and enables the government to extract a levy (tax) for the exchange of goods and services between two parties. If I have something to sell (eg my labour) and their is someone who wants to buy what I offer, then we agree a price. That price can be in pounds sterling or chickens. I can eat chickens but not pounds sterling. For me to eat I have to give my pounds sterling to someone who, the has to give the government its share after the exchange of any goods. In all this, where has the government, apart from creating an unnecessary construct (currency) come into all this ?

        You see, we do not need government, certainly not the size it has become. Ergo this so called, UK Social Mobility Commission

    5. Lear's Fool
      December 3, 2017

      What about the bombardier duties? Trump wants industry to relocate to the US and not to the Uk. The Uk is more of a competitor for the US given its specialisation in similar sectors such as high tech manufacturing and business services, unlike china.

  12. Nig l
    December 3, 2017

    Good news, maybe your Chancellor will note and act although I doubt it and we do not have the economy that can continue such massive deficits.

    What a shame that at precisely the time that we see potential for more growth, your mobility tsar resigns saying that the Prime Ministers words were empty and your government doing nothing. More fodder for Corbyn and seemingly another example of poor management by HMG. Surely someone could have done enough to keep him onside?

  13. Peter
    December 3, 2017

    As Ann Coulter pointed out, Trump voters wanted “A wall, more jobs, lots of deportations”.

    Tax cuts were not their number one priority.

    1. Lifelogic
      December 3, 2017

      Tax cuts will mean more and better paid jobs.

      1. Peter
        December 3, 2017

        I suppose you believe in ‘Trickle Down’ as well?

        1. libertarian
          December 3, 2017


          No, trickle down is a socialist invention, there is no trickle down in free markets. It gushes. Anyone who has ever actually done anything in business or trade recognises this . Tax cuts quite obviously mean more investment, more investment results in more jobs/higher wages. More investment means buying more capital equipment which is manufactured by someone else. Thats a fact not a theory > This is so blindingly obvious that only fantasist socialists refuse to see it .

          1. Peter
            December 3, 2017


            It means nothing of the sort.

            Hence the rise of populism.

            American voters tired of ‘bait and switch’ tactics of Republicans who promise the world, but once in power offer ‘tax cuts’ so that the average voter has ended up losing their standard of living/job over the decades.

            ‘Gushes’ ?

            You ‘obviously’ live in cuckoo land.

          2. libertarian
            December 4, 2017


            Yes obviously Peter, that is to anyone capable of thinking things through . If my CT tax bill is reduced by £100 k then I’ve £100k more to invest obviously.

            Here in “cuckoo land” or the real world as its known, we actually experience things first hand.

            Gushes, yes its how free markets and specialisation work . I make something and sell it, I buy something with the profit made by someone else etc etc etc if you can’t work that out then you really are very simple.

            Like here US unemployment has plummeted. You will need to do some pretty big about turns and reverse ferrets to show that a tax cut reduces the standard of living of a worker. You lefties make me laugh you’re so gullible. Keynesian investment of taxpayers money is trickle down economics.

            Heres a hint Peter, before you answer this do some research in to what happens to taxes, profits, investments etc in the real world not in a socialist text book.

          3. Edward2
            December 4, 2017

            You won’t convince socialists Libertarian.

            For them wealth is finite, the wicked rich steal it from the poor and only a big interferring state can create wealth.
            Tax borrow spend is their motto.

    2. Caterpillar
      December 3, 2017

      Peter, it is timely to compare your/Coulter’s points with Mr Milburn standing down. The UK govt needs to wrap up Brexit immediately and cleanly, and move on to rebalancing the economy. PM May’s remain tendency has allowed her and the govt to drift off task. She needs to recognise the vote, implement clean and legitimate Brexit, rebalance and grow the economy, maintain and develop international allies.

  14. mickc
    December 3, 2017

    I must point out that a tax cut is not a “give-away”; the money already belongs to the taxpayer. That term has become common usage for tax cuts and carries the implications that the government is being generous with its own money; it is not.

    1. Duncan
      December 3, 2017

      Absolutely. I find it unnerving that a free-market, small State advocate like JR should use such socialist terminology

      The State is a parasitic vested interest. It’s primary function is the protection of itself and its raison d’etre is the pillaging of our wealth and our income to finance its own privileges, pay and pensions

      The private person owes it not one jot of loyalty. The state takes my money, it takes my freedoms, it tells me what to say, it dictates what I watch on television and it conspires with activist groups to slander me

      It is my firm belief that in 50 years time the UK will be a totalitarian state with democracy acting as nothing more than a veneer

      1. Nb
        December 3, 2017

        It is my firm belief that in 50 years time the UK will be a totalitarian state with democracy acting as nothing more than a veneer

        That is how it is now.
        The State is in competition with the religious class on who governs. We win in the end.

      2. Peter Martin
        December 4, 2017

        Without the State there would be no financial system. The BoE and the Treasury, who issue the money into economy, are owned by the State. Money has to come from somewhere in the first instance. It isn’t created by the taxpayer unless they are in the counterfeiting business.

        Without a State there would be no laws. Without laws and without the financial system there would be no commerce. Trade would be reduced to barter.

        So the State has to occupy a substantial part of our National economy. Whether that should be 20%, 50% or anything in-between, has to be a matter for the democratic process.

        1. APL
          December 4, 2017

          Peter Martin: “The BoE and the Treasury, who issue the money into economy, are owned by the State. ”

          The Bank of England was a privately owned operation since its foundation in 1694 until it was nationalised by the State in 1941.

          If your assertion were correct there would have been no commerce before 1941, an assertion should you put it forward, would be patent nonsense.

        2. libertarian
          December 4, 2017

          Peter Martin

          Well you better explain then how money and the financial systems existed prior to the state being involved.

          The state enforces contract law. Thats it. Its only done that since the industrial revolution

          You still dont understand

        3. Peter Martin
          December 7, 2017

          @APL @ libertarian,

          It’s more a question of control than ownership. The US Fed is one of the few central banks which aren’t owned by their government but the degree of control is exactly the same as if it were. There could be a degree of independence for central banks in the days when all currency was hard backed by gold. But those days are long gone.

          All currencies are now totally fiat. This means government involvement to make them worth anything. They are best understood a ‘tax voucher’ of the issuing govt.

          1. APL
            December 9, 2017

            Peter Martin: “All currencies are now totally fiat. This means government involvement to make them worth anything.”

            Do you even recognise a circular argument when you make one?

            The governments took their respective currency’s off the gold standard, an act which made them fiat currencies. But according to you we need the government to give value to the currency.

            But secondly, nearly all Western governments have as a tenet of policy the continuous devaluation of the fiat currency. 3% per year devaluation means you loose £25 of every one hundred over ten years.

            To suggest that you need the government to give value to the very thing the government is actively destroying is simply nonsense.

    2. Nig l
      December 3, 2017

      Spot on. The problem is that politicians think they can spend it more effectively, sometimes yes, often no and indeed apart naked ambition, that is why they enter politics.

    3. Lifelogic
      December 3, 2017

      No a tax cut us government mugging people slightly less. Hugely efficient tax cuts are too as they use the money so much better on average, it is not hard to do so after all.

      It needs to come with spending and bot wasting cuts too.

  15. Iain Gill
    December 3, 2017

    Shame we don’t have our own trump instead of the wishy-washy liberal elite with crap negotiation skills that infest our public life.

  16. Peter Martin
    December 3, 2017

    The analysis of how tax cuts work is essentially correct in Keynesian terms. They do provide a fiscal stimulus to the economy. A Keynesian stimulus does not have to involve increased Government spending. Depending on the nation’s priorities, and to a large extent, political preference, they can involve tax cuts too.

    As John says, lower tax rates do not necessarily have to result in lower Govt revenue. As the economy becomes more active there will be an increased number of financial transactions which will inevitably compensate for that. Maybe even over compensate.

    The US Government’s fiscal deficit will always be equal, to the cent, to what everyone else in the economy, including the USA’s trading partners choose to save. If they choose to save less as they see more investment opportunities, it will fall.

    The UK and EU governments could well follow the same policies. Raising taxes and cutting spending to try to ‘balance the books’ never works and is generally counterproductive in terms of economic activity.

    The is just one potential danger. There could be a slight upturn in the rate of US inflation.

  17. The Prangwizard
    December 3, 2017

    Maybe we will see less ‘inward investment’ into the UK by US companies if some of them find there’s more money to be made there than here. I hope so. Maybe that will give us some breathing space to change towards more self sufficiency.

    There is an urgent need to make more things here with home owned busineses and I don’t just mean new tech but ordinary things. This is where government must give real incentives. We should look around and realise just how few of the things we see and use are not made by us.

    1. The Prangwizard
      December 3, 2017

      Oer. ‘Not’ should not be in the final few words!

  18. Ian Wragg
    December 3, 2017

    Good news for the American public. Meanwhile back home we are being sold out again by our remain Prime Minister.
    The ECJ will continue to have sway over British law. No doubt they will be the final arbiter of who can come, who can claim benefits and no doubt rule on labour disputes

    Tell me John what other sovereign nation has interference from a foreign court.. I can’t think of any.

    1. Denis Cooper
      December 3, 2017

      Worse still, the Americans have now picked up on the idea and are saying that if the EU federal supreme court is going to continue to protect the rights of EU citizens living in the UK even after the UK has left the EU then they want the US Supreme Court to be able to protect the rights of US citizens living in the UK, and the general idea is spreading around the world that any foreigner resident in the UK should be able to ask the courts in his home country to overrule the courts in the UK.


    2. Linda Jones
      December 3, 2017

      It has been said by a certain prescient and elder statesman: ”There is a name for appealing over the head of the Crown to an authority outside the realm, and that name is treason.”

  19. Andy
    December 3, 2017

    A few posts ago you commented on how we need decent schools and hospitals. And now you talk about sweeping tax cuts. We can not afford decent schools and hospitals unless somebody pays for them – and that means taxes.

    Nobody likes paying tax. But nobody likes rubbish schools and hospitals either. The US, with this reform, has the balance massively wrong – and those in most need will suffer most as a result.

    I say this as someone who pays a lot of tax. More, I’d wager, that almost any of you. My wife and I have an annual income tax bill well in to 6 figures. Tax costs us double our mortgage payments, school fees, car repayments and health insurance combined. It is, by far, our biggest expense.

    But we are incredibly lucky in life and we know it. It is our duty is to help those less fortunate than ourselves – and we do.

    We are well off – and we know it. But we also know that we have a moral responsibility to those who are not well off. We have a duty to do our bit to make society better. We are in a position to do more than most, and we do. We do not object to paying large amounts of tax. It is the price of living in a decent society.

    Incidentally, I find that most of the individuals who whine about tax do not actually pay very much of it.

    Reply If you set lower rates you often collect more tax to pay for the schools. See how much more higher pay Income Tax and corporation tax we are collecting since the rate cuts.

    1. eeyore
      December 3, 2017

      “We do not object to paying large amounts of tax. It is the price of living in a decent society.” Go on Andy, set us an example. Pay more tax. Post the receipt here so we can all admire your sacrifice.

      Tax is not the price you pay for living in a decent society. It is the protection money extorted by the threat of sending you to prison.

      1. Andy
        December 3, 2017

        Tax IS the price you pay for living in a decent society. No taxes – no schools, no hospitals, no roads, no railways, no prisons.

        When you get sick I bet you use the NHS. I bet you’d whine if you couldn’t get care. And I bet you expect someone else to pay for it.

        As for Mr Redwood’s point. There is, indeed, a level above which taxes are punitive. Lower them and you raise more.

        However, there is also a level below which services become unsustainable without vast amounts of borrowing to top up lower tax receipts.

        The Americans have got it wrong. They’ll either have to ace services or build up debts. Either way the pensioner Republicans who have voted for it don’t have to worry. They won’t be affected.

        1. eeyore
          December 3, 2017

          Andy – with spooky accuracy you pick five fine examples of state overreach. Why shouldn’t people buy their own health care? They buy their own food, clothes, transport, housing and pleasures, in none of which is there rationing or crisis, and in most an exuberant abundance. The same for education, railways and – why not? – roads and prisons.

          The principle in a free society should be that the State steps in to provide only those things that individuals cannot. Defence, currency and law and order are the usual examples. Anything else should be left to individual choice and the magic of free markets.

          But don’t believe me. Watch what happens in America as the brakes come off and people are trusted again with their own money.

          And yes, I do use the NHS, which I’ve paid for over a lifetime. To do otherwise means paying twice over. No, I don’t expect others to pay – the thought is repugnant. And I wouldn’t whine. I’d insure.

        2. NickC
          December 3, 2017

          Andy said: “No taxes – no schools, no hospitals, no roads, no railways, no prisons.” Not true, and you know it. It may (or may not) be “fairer” to pay for these services out of taxation, but that they would disappear without government provision is nonsense.

          1. rose
            December 4, 2017

            Schools, hospitals, and railways were all provided privately – through private investment or through charity – before the government took them over. Without this private enterprise there would have been nothing to take over.

      2. Peter Martin
        December 7, 2017

        “Tax is not the price you pay for living in a decent society. It is the protection money extorted by the threat of sending you to prison.”

        It can be both. The threat of “sending us to prison” is indeed what makes the system work. In the absence of any gold standard backing, the whole purpose of taxation is to make currency issued by Govt worth something and prevent excessive inflation. That would be impossible if taxes were voluntary.

    2. libertarian
      December 3, 2017


      If you want decent schools, pay for them yourself, Why should i pay to educate your kids. I want lots of expensive foreign holidays, why dont you pay more tax so that the government can send me on some?

      I think we all need food way before education and hospitals, but the government doesn’t supply food, why should it supply education and health?

      1. hefner
        December 3, 2017

        L. As an entrepreneur, I guess you want your staff to be able to understand what you want them to be doing, so some education is going to be necessary, specially if your company is dealing with technical matters.
        I guess you also want to be able to keep that workforce for more than a couple of months, so it is better if those people are/stay healthy.
        As an entrepreneur, are you going to pay for the education and health of your workers?

        On a related topics, are you (and a number of others on this blog) such snowflake(s) that you cannot take any bit of contradictions?
        Sad, sad, sad!

        1. libertarian
          December 4, 2017


          You’re inability to think is legendary, NOWHERE did I say I didn’t want education, healthcare or any other form of useful service. All these things were originally invented, built and put in place long before the state started interfering.

          The fact that you can only think one dimensionally is far far sadder

          Actually yes I do already pay for both education ( through training and qualifications) and health through both private health insurance and gym memberships) for my colleagues

          Ive no idea what you are burbling about with contradictions and snowflakes…

      2. Peter Martin
        December 7, 2017

        @ libertarian,

        You ask:

        “Why should I pay to educate your kids” ?

        It has been estimated that some 15% of all children don’t have the same father, in the biological sense, as their birth certificate shows.

        So how do I know that I’m not paying to educate your kids?

    3. a-tracy
      December 3, 2017

      Are you both working in the public sector or private sector?

  20. Javelin
    December 3, 2017

    Have you thought about the next election? Judging from polls and social media, I’m guessing only 15% of the electorate approve of May or Corbyn.

    So are the Conservatives going to rely on (1) a phoenix leader or (2) no alternative emerges.

  21. William Long
    December 3, 2017

    With luck this may put some competitive pressure on other nations. At the moment it looks as if that is our only hope of Tax reform here while this un-Consrvative government is in power.

  22. jerry
    December 3, 2017

    Interestingly one of the side effects of these proposed US tax changes appears to be a greater level of and a longer period of national debt. So rather than current US voters paying their national debts off within their own tax paying years this debt is likely to be passed to their children and perhaps even grandchildren. Something the UK’s political right have repeatedly said should not happen in the UK, so I take it John that ‘tax cuts’ are not on the agenda here, or is the UK’s national debt not so important when it comes to votes?

    1. Tad Davison
      December 3, 2017


      You make an interesting point, and I often wonder if a state of high indebtedness is part of their long-term plan?

      That applies equally here in the UK.

      I am deeply suspicious of the greater number of our political representatives, and I trust very few. I know this much, if there’s another crisis like that of 2008, and we in the UK are again called upon to bail out the banksters, our debt would be overwhelming and there would be no money left for vital services. That cannot be allowed to happen.


    2. mickc
      December 3, 2017

      The UK’s political right would not have run up the national debt in the first place. The banks should not have been bailed out and QE should not have happened.

    3. libertarian
      December 3, 2017


      Welcome back

      There is a rational alternative of course , overlooked by politicians of all parties, that is to spend far far less. Its really easy. Ring fence essential public services and get the hell out of doing everything else .

      1. jerry
        December 4, 2017

        @libertarian; “Its really easy. Ring fence essential public services and get the hell out of doing everything else”

        I suspect that idea would flounder at the first hurdle! Who will decide what the essential public services are, no two focus groups, never mind voters, will agree.

  23. Edward2
    December 3, 2017

    The experts have predicted a huge cost to the USA Treasury due to these tax reductions.
    I will predict the complete opposite in that there will be an overall gain to the USA treasury.

    I base this on these same experts predictions of a huge costs to the UK Treasury when corporation tax and top rates of income tax were reduced here.
    The result was a large increase in tax revenues.

    When capital gains tax went up from 18% to 28% the experts predicted a large rise in revenues.
    The result was a fall in revenues.

  24. Epikouros
    December 3, 2017

    I note this USA tax bill is like all others to satisfy the needs of the politicians and not to satisfy the nation’s true economic needs. Of course there are elements in it that has that goal but is largely negated by the political horse trading and vote seeking that produced the completed package. True there are some bits that like the reduction in corporation tax will give the USA an edge over her competitors which of course is a good thing. As competition is healthy and if others do not try to emulate them or even surpass them then they will suffer accordingly.

    The EU have noted that Ireland with it’s 12.5% corporation tax is putting pressure on other EU members to follow suite. Naturally Brussels is not happy so in their usual pompous and bureaucratic way wish to suppress all initiatives that do not fit into their agenda. It is they they say nay demand who decide EU policies and actions not their membership. Anyone who deviates from that then whoa betide them and for Brexit that is an affront to their power and prestige and that they will not stand for. Oh no dearie me they will do everything they can to punish the pesky Brits for their audacity. Starting by making outrageous reparation and negotiation scheduling demands. Legality and being fair does not apply to them that is for lesser mortals. Demigods may do what they like.

  25. I say
    December 3, 2017

    The Marr Show today. Disgusting!

    Does anyone in this country believe in free speech? Well I do. I think it helps in appreciating the value of it if you have had at least one sincerely held opinion in you life which eventually you came to regard as absolute twaddle.It may be ones opinion of another via a romantic relationship.
    Yet on this show and on BBC QT increasingly so it seems, there is no respect for someone else but worse, it seems okay to shout them down,not listen them at all and attribute nastinesses to their personalities.
    I used to be very left wing. But I hope and believe I understood, then, that people do not DECIDE on their opinion. It is thrust upon them whether they like it or not.
    I am surprised mostly by the traditional intelligence and the jobs some people in these shows have. Their employers can’t be much cop. The job is to make rubber ducks but they only believe in one kind of duck, one colour of duck ,one size of duck and anyone not particularly liking ducks is duckophobic and also hates hen ducks…a duckogynist

    1. Anonymous
      December 3, 2017

      Quack quack.

  26. georgeP
    December 3, 2017

    Us economics is in a race to the bottom- it is fast becoming a basket case, not only that but under President Trump that once great country The United States is turning in on itself. Nothing Trump achieves now will be taken with more than a grain of salt by business and the financials. Trump will be out on his ear in three years time if not well before, all business planning including for taxation takes a much longer view of things- it has to. On this side of the ocean there is no way that UK can hope or bet on doing a trade deal with them post March 2019- they have become too unreliable too much fake stuff- government knows this

    1. libertarian
      December 3, 2017

      Dear george P

      Meanwhile in the real world

      The S&P 500 has increased 20.4% from a year ago.

      At 4.1%, the unemployment rate is at a 16-plus-year low

      Manufacturing jobs have rebounded this year back to the levels of 2012 to 2014.

      U.S. economy grew at a 3 percent rate

    2. R.T.G.
      December 4, 2017

      Those, who are in the habit of putting their money where their mouth is, might disagree with you:

      Level of S&P 500 in the week before Mr Trump’s election was approximately 2150.
      Present level of S&P 500 after about 13 months of President Trump being in office is approximately 2600.

  27. Denis Cooper
    December 3, 2017

    Off topic, I’ve just seen the Irish Foreign Minister and now Deputy Prime Minister on the Andrew Marr programme telling a very different story to that given to Sky News by the Irish Europe Minister only last week when she said:

    “We have been very very clear from day one, there cannot be a physical border and that means ruling out cameras, that means ruling out technology, that means ruling out anything that would imply a border on the island of Ireland, it is not an option for us”.

    It’s hard to see how we can possibly negotiate with such a confused counter-party.

    1. Denis Cooper
      December 3, 2017

      Once again Christopher Booker misleads his readers:

      by ignoring the inconvenient facts that while Norway is in the EEA the EU regards it as a “third country”, and as it is not in the EU Customs Union it has a customs border with Sweden which is in the EU and in the EU Customs Union; therefore whatever problems may arise over the border between Northern Ireland and the Irish Republic they would not be solved by the UK staying in the EEA.

    2. BretW
      December 3, 2017

      Denis..the irish know much more than anyone else here about what is needed to preserve trade and peace on the island of ireland. There is a lot of misinformation coming out now from people like IDS and J R-M etc about what is going on but these guys like the other hangers on in the tory right wing including JR himself are only in the ha’penny place when it comes to these matters as we shall see in a few days- their redlines will count for nought.

      We were horribly lied to by the likes of Boris Gove farage and others and now comes the day of reckoning.. the May governmenyt and DD are having an awful time in trying to square all of this..all brouht about through ignorance and subterfuge carried out on a massive scale

      1. Denis Cooper
        December 3, 2017

        I’ve just given a direct quote from the Republic’s Europe Minister, who I guess is Irish. As to “ignorance and subterfuge carried out on a massive scale” you’re dead right, it really started when Harold Macmillan was Prime Minister and has carried on from then for nearly six decades. There’s even a Foreign Office document about it available in the National Archives.

      2. rose
        December 4, 2017

        A former First Minister, David Trimble, who knows all about Northern and Southern Ireland has written on this in this week’s Spectator.

  28. graham1946
    December 3, 2017

    This will be handy for the UK as we will have a ringside seat and be able to see if such tax cuts do actually result in more tax being collected or just a bigger deficit. The sum of 1.4 trillion is such a huge sum, even over 10 years, (although I’d be surprised if Trump sees out even one term) and is equivalent to almost our entire national debt that we will never be able to pay off, that there will have to be one hell of a boom to make it up.

    1. lojolondon
      December 3, 2017

      I guess you are sadly too young to remember the miracle wrought on the entire world by Thatcher and Reagan in the mid-1980’s as they cut taxes and boosted both economies – against the advice of every ‘finance expert’ and the scathing comments of the media.

      1. graham1946
        December 4, 2017

        No, I am sadly old and remember exactly what happened. When we de-industrialised, most of our oil revenues was used on welfare which has continued since and we have not a single thing to show for the billions that industry produced, it was all spent on day to day expenditure rather than a sovereign wealth fund like Norway have. I am sceptical that these tax cuts fund themselves. What is needed is spending cuts on non essential rubbish and quangos.

    2. acorn
      December 3, 2017

      The below median income US households rarely pay federal taxes. Hence this is a tax plan for the top end of town. The budget deficit is planned to rise from 3.4% to 6.0%. The debt to GDP to increase from 78% to 97%.

      Government deficit and debt don’t actually matter, the US Treasury is never going to run our of US dollars. It won’t matter to our children either. They may wish to run a bigger deficit; their choice.

      All the usual macroeconomic myths like Laffer curves and Ricardian equivalence are supposed to make this tax cut pay for itself, but it won’t, it never happens. But, there are likely to be some short term “forestalling” gains, as off shore funds get swapped and repatriated to US corporate shareholders. Some of them may spend those funds and create some more consumer demand that will require further supply side investment.

      Mr Trump is doing exactly what the US needs. He is using the government’s power to create money and inject spending power into the US domestic economy. The only thing that needs watching is outbreaks of inflation, if sectors of the economy get overstretched and inflation creeps in.

      The UK and the EU both need a President Trump right now and no brexit!

      1. graham1946
        December 4, 2017

        Government debt and deficit don’t matter?

        What about the small matter of interest payments which amount to more than what we spend on defence? This is pure waste and will continue forever as we will never be able to reduce the debt. I know some of it is owned by the BoE, but that’s only about 25 percent, but is still not available for what we want to spend it on. We haven’t reduced the debt for donkeys years and even if we were to pay what we pay to the EU in its entirety rather than spend on the NHS etc it would take the thick end of 200 years to clear.

        1. acorn
          December 6, 2017

          Graham. In short, the Treasury does not have to pay interest to anybody, because it is not forced to issue Gilts; it does not have to borrow its own money, it is the currency issuer. You can’t get Sterling from anywhere else except the UK Treasury. You can’t pay your UK taxes with anything else but Pounds Sterling.

          The private financial sector has no “risk free” assets of its own, it depends on government Gilts to fulfil that purpose. The UK currently pays £240 million a week to foreigners who buy Gilts as savings certificates. There is no operational requirement to do that. Gilts do not fund government spending; but, they can be issued to reduce the spending power in the private sector for interest rate control rather than using fiscal measures.

  29. Derek Henry
    December 3, 2017

    If you read and analyse the Daily Treasury statement in the US. Which is the most up to date data bar none.

    86% of all the taxes paid was $2.4 Trillion came from employment and witholding taxes which is the working person on the street. Only 14% came from corprate taxes.

    So don’t hold your breath as it is not going to be the huge fiscal stimulas you all expect.

    The HUGE problem is the lies and deceit and framing and language and far right wing propaganda that is used to create a budget deficit and national debt hysteria that they frighten people with. This gold standard nonsense has stopped Trumps tax plan from being excellent and brilliant as it does not go far enough.

    Senetar Bob Corker comments this week highlight these problems. The man is an idiot. Talking about what the tax cuts will do to the deficit or the national debt is non sensical.

    SO what if the tax cuts add another $1.4 trillion to the national debt. A U.S. government deficit is just a $ surplus in some other part(s) of the economy. And the national debt is just that surplus transformed into an investment in US Treasuries.

    The $20 trillion national debt is just everyone who saves in $’s that is now invested in US treasuries which is mainly the pension funds. It is the private sector savings to the penny.

    This is why we are in the mess we are in with brexit. The lies and framing and propaganda surrounding our deficit and national debt has gone on long enough. 40 years as if it is like a household budget has been damaging in so many ways it is criminal.

    If Someone would just tell the truth after all these years of what the budget deficit and national debt is actually made up of. Then brexit would be a walk in the park.

    I should know as I’ve studied the actual accounting between HM Treasury and the BOE for 6 years now and in great detail. What we are actually told and how it works is a sham and a crime against humanity. It’s nasty at its heart and it is lies and deceitful and not very Conservative at all.

  30. Bert Young
    December 3, 2017

    Trump is certainly no diplomat but , as a businessman , he knows how to reach the interest of each and every voter . Lowering taxes is as relevant in the USA as it is here . Incentives are the best way to drive on achievement .
    I have just picked up the news from the ” Leave means Leave ” group and the detail of John’s support . I know that their approach is the right one in securing the right sort of deal with the EU. Showing an underbelly in any sort of negotiation will never succeed .

  31. Denis Cooper
    December 3, 2017

    Off this topic, but hopefully to soon be on another topic, a cracking letter to Theresa May with our host as one of the signatories:

    I particularly like the bit about our conciliatory approach not being reciprocated, which of course is quite true; as it happens the editor of our local paper gave a similar but rather stronger headline to a letter I had sent in:

    “Conciliatory approach thrown back in UK’s face”

    1. Robert Christopher
      December 3, 2017

      As I don’t watch the BBC any more, for news or current affairs, could anyone who sees or hears this brilliant letter discussed on the BBC, could they mention it here, please. 🙂

    2. Hope
      December 3, 2017

      Conciliatory is not the correct word. It is clear conceding is, nothing has/was given in return. Therefore it could not be viewed as an exchange of concessions to reach a compromise. The EU has broke the Treaty governing article 50 and nothing should have been discussed from that point on until the EU fulfilled its legal obligations. Not to do so showed weakness in the extreme by the U.K. It gave the green light to the EU to dictate anything it wanted and it has!

      There cannot be a good deal as the other countries would leave the EU. May is trying to create a narrative by use of menaless phrases such as special and deep relationship to disguise incremental concessions to stay in the EU all but name. If the ECJ has ultimate jurisdiction over the the EU citizens then it applies to all 450 million. Which means the U.K. Does not have control over its borders or laws. Continuing to pay the EU club fees whether over a large number of years or a lump sum menas we are paying to stay in. The EU Florence speech which May read was welcomed by all remainers! I wonder why? So it could be used and manipulated to mean the UK remains in. The game up for May and co I am afraid as the public do not accept the vast amount of money she is offering, not when our public services are overwhelmed and (many ed) houses taken by immigrants.

      1. Know-Dice
        December 4, 2017

        “Not to do so showed weakness in the extreme by the U.K. It gave the green light to the EU to dictate anything it wanted and it has!”

        Agreed, the UK Government allowed the EU t0 get away with this from day one. David Davis should have not allowed this method of “negotiation” to be used, purely on the fact that it isn’t in accordance with the Lisbon Treaty and Article 50

    3. Norman
      December 3, 2017

      Thanks, John (et al), and Denis. Hear, hear to both letters.

      1. Norman
        December 3, 2017

        PS: I think history will show that the EU entity, by its very nature and constructs (as it has now become), will brook no compromise, and is therefore by definition, incapable of negotiation. Because of the longer-term implications for Europe as a family of nations, a responsible UK government must in all good faith try to get a workable deal, but be under no illusions that it may prove impossible – and to be fully prepared accordingly. Otherwise, the only alternative would be capitulation. I seem to remember we have been here before!

    4. The Prangwizard
      December 3, 2017

      I suspect and fear the PM will not be listening; I expect she and her clique locked in the bunker regard Mr Redwood as no threat in that he will do no more than write polite albeit critical letters. She will continue alas with her betrayal of our democratic will.

    5. acorn
      December 3, 2017

      Welcome to the “King Canute Club”. Well sort of. If you remember, the Canute fan club were convinced he had the power to hold back the [EU] tide. He tried to convince them, by sitting on the beach at low tide, that only God could hold back the tide.

      Canute 2017 has to be Owen Paterson surely. You may also remember that when the tide came in on the Somerset Levels; Paterson pulled a “sicky” and disappeared into a hospital.

    6. Anonymous
      December 3, 2017

      Thanks JR

  32. Derek Henry
    December 3, 2017

    Why is all of this so important to our Brexit stance.

    And what have we gained by the pain inflicted by this proactive deficit reduction policy? Absolutely nothing of value. That has pushed millions into personal debt levels that are unsustainable for our economy.

    The ‘national debt’ is nothing more than a bunch of dollars balances in savings accounts’ at the Federal Reserve Bank better known as ‘Treasury securities.’ These ‘securities accounts,’ as insiders call them, along with checking accounts at the same Federal Bank (called ‘reserve accounts’) and the actual cash in circulation constitute the total net dollar savings of the global economy, to the very penny. When the U.S. government spends more than it taxes, those extra dollars it spent first go into our checking accounts, and then some gets exchanged for actual cash as needed, and some goes into those savings accounts at the Fed called Treasury securities.

    So how is ‘all that debt’ paid off? When Treasury securities are due, the Fed simply shifts the dollars from those savings accounts at the Fed to checking accounts at the Fed. That’s all! And this is done for tens of billions every month. The debt is paid off by a simple debit and credit on the Fed’s books. There are no grandchildren or taxpayers in sight — they would only be getting in the way.

    Last fiscal year if you analyse the Daily Treasury Statement over $90 trillion was paid off this way. Nobody even noticed.

    There is no such thing as leaving our debt to our grandchildren! You are leaving your savings to your grandchildren.

    The language, framing and propaganda used to describe the whole process like a household budget is cruel, evil and nasty but it wins votes which is a travesty.

    Which will cause nothing but problems if we want to cut taxes after Brexit. If the truth was actually told it would be a walk in the park.

    Now is the time to tell the truth or forever be in an imaginary straight jacket that does not exist.

  33. wab
    December 3, 2017

    More trickle-down fantasy from right-wing zealots.

    And of course, since he always cherry picks evidence, Mr Redwood conveniently forgets to mention the procedure that produced these tax cuts (which are indeed mainly aimed at the rich, especially the idle rich, like Trump). No hearings, no discussions, just some back room discussions amongst a few Republicans and their donors and lobbyists. So much so that the final bill had hand scribbled amendments to please certain lobbyists / donors. What could possibly go wrong with a bill with no serious discussion and which is so blatantly tilted to donors and lobbyists.

    Of course this is not policy yet, because the Senate needs to reconcile the handouts to the rich in their tax bill with the handouts to the rich that the House has in their tax bill.

    Most serious commentators predict that the tax bill will increase the deficit, not decrease it. Perhaps Mr Redwood can share with us his detailed economic model which demonstrates otherwise.

    1. Edward2
      December 3, 2017

      It’s nothing to do with “trickle down”
      It’s just a tax cut for individuals and companies.
      Leaving the wealth creating sector with more of their own earned money.

    2. Denis Cooper
      December 3, 2017

      I was interested in the handwritten amendments for historical reasons.

      “The UK Houses of Parliament changed from hand writing original Acts of Parliament to printing them in 1849. They are printed on vellum, and still are to this day.

      The Acts were also the bills, until the switch to printing. The bills would pass through one House, be handwritten onto parchment after report stage, and all amendments made on third reading and during all stages in the second House were painstakingly made onto the parchment. This same document became the Act after Royal Assent. This is the case from 1497-1849, so anyone wanting to consult bills in this period should actually consult the original Act.”

    3. Anonymous
      December 3, 2017

      If I’m taxed less I’ll work more and spend more.

      That’s good for the community, nay ? It will also generate more tax over more activity.

      1. Anonymous
        December 3, 2017

        At them moment I’m pinned down. Scared to work and scared to spend.

  34. Bob
    December 3, 2017

    “with a costed $1.4 tn of giveaways over ten years”

    what is being given away now?

  35. ian
    December 3, 2017

    Of note was the increase IHT from 5 million dollars to 11 million dollars, tax cuts for people will last for 10 years, while business tax cuts will carry on. As for the 1.4 trillion to be added to the debt, I think they should do their sums with more care next time and increase in people tax threshold from 6000 dollars to 12.000 dollars is because they are doing away with the tax deduction for OBAMACARE.

  36. Tad Davison
    December 3, 2017

    Tax cuts can stimulate an economy and examples of that are many. The opposite is also true – a lesson that appears to be lost on some politicians here in the UK. Yet tax cuts can take time to percolate through, so I wonder if the US economy might get an instant boost were it not to spend so much on defence?

    This is a problem that goes back many decades and one that Eisenhower alluded to with his reference to the ‘Military Industrial Complex’. He complained that he (an ex-soldier) didn’t want to spend one dollar more than was necessary, and wanted to rein-in the heavily lobbied-for US arms industry. Kennedy wanted to do the same, and indeed instructed his new administration to rationalise US weaponry and ‘junk’ a lot things that had been bought but weren’t needed. And that was at a time when there really was a very dangerous existential threat in the form of the Soviet Union.

    Stoking an arms race and creating a state of perpetual war to justify arms expenditure hampers so many other things. Surely it cannot be right that in the absence of another USSR, a country creates bogeymen to fight, to keep an over-inflated arms industry in their over-capacity, when there is third-world poverty in every state of the union.

    I am not an advocate of the ‘spend and waste of other people’s money’ philosophy that some political doctrines would have us adopt, but some services are undoubtedly vital. We are finding that right here in the UK where cutting police numbers is having a drastic impact on rising crime.

    It seems there should be a more evenly-balanced structure than the one the US has right now. Tax cuts will help stimulate the economy, but much more could be done and sooner, if other areas of US expenditure came under the microscope.

    Tad Davison


    1. Mitchel
      December 4, 2017

      George F Kennan,the great American diplomat and Soviet specialist wrote:

      “Were the Soviet Union to sink tomorrow under the waters of the ocean,the American military-industrial establishment would have to go on,substantially unchanged,until some other adversary could be invented.Anything else would be an unacceptable shock to the American economy.”

      And,interestingly,Gorbachev’s veteran adviser and leading “Amerikanist”,Georgi Arbatov wrote in 1988(three years before the dissolution of the USSR):-

      “The Soviet Union chooses not to continue the Cold War.And here we have a secret weapon that will work almost regardless of the American response-we would deprive America of the enemy.”

  37. ian
    December 3, 2017

    I all so noted that when the bill was passed, nobody in the senate had read the bill or amendments to the bill before passing the tax bill.

  38. lojolondon
    December 3, 2017

    THIS is what Trump is all about. Large tax cuts for all corporations and for individuals at every level, but particularly at the low end. He is playing a masterstroke that will boost the US economy for decades, in marked contrast to the stodgy UK economy under the control of our dull and unimaginative Chancellors. Thatchernomics / Reaganomics are coming back in a big way, and the Western world will owe it all to Mr Trump!

    Note that the BBC has this groundbreaking news listed nowhere in their main headlines, and only 5th on the US “news” page – after such pointless items as:
    – US in race to address N. Korea threat
    – Metropolitan Opera investigates abuse claims
    – ABC suspends reporter over Flynn report
    – Trump says Flynn’s Russia dealings lawful

  39. ian
    December 3, 2017

    One more note of interest about the tax bill put before the senate was that the bill was 470 odd pages long in typed writing and amendments to the bill was written by pen by the side of the typewriting, which senators said was hard to read and understand with other pages cross off by a pen.

  40. Chris
    December 3, 2017

    O/T, but thank you Mr Redwood for taking this action and signing this very important letter regarding red lines:

    “Not since the Hawaiian islands volunteered to cede their independence and become a vassal of the USA in order to avoid worse, has their been an example of a sovereign nation willingly becoming a subservient entity of another. That is exactly where the UK is heading unless the Prime Minister makes it crystal clear to the EU where she stands on Brexit in these coming weeks.

    A letter sent today to Mrs May, signed by a strong phalanx of senior entrepreneurs, economists and politicians, makes it crystal clear that she should lay down immutable red lines and be determined to stick to them…”.

  41. Mick
    December 3, 2017

    Off topic
    I sure as hell don’t want another referendum of which if it happened it would be rigged to leave, I wonder were they get this shock poll from could it be from the Remoaners and snowflake London by any chance, it’s about time someone organised a demo for Brexit in the middle of England so we can turn out in force and let the media, eu , remoaners know we have had enough of all this pussyfooting around and we get out of the dreaded eu ASAP

    1. Mick
      December 3, 2017

      Oops misprint I should have said “rigged to stay”

    2. Sir Joe Soap
      December 3, 2017

      I think it would be a pointless exercise, because it’d be a clear stitch-up that would continue until they got the right answer. Most wouldn’t bother to vote.

    3. cornishstu
      December 3, 2017

      I have no problem with a referendum, if it is to accept the final deal and paying up or to walk away on WTO terms and pay nothing. Thing is I don’t think they would chance it, we might not vote the way they think we should.

  42. ian
    December 3, 2017

    Yes Denis Cooper, but only five politicians sign the letter, which will end up in waste paper bin or file under misalliance.

    1. Rien Huizer
      December 3, 2017

      Where it belongs

  43. Daniel
    December 3, 2017

    Now we have tory right wing types drawing red lines..what a pathetic havn’t got a leg to stand on ..talking about not paying unless?? absolute nonsense you have no choice now if you want to have any sort of a future..the future i’m talking about is half in and half out and paying for evetything..what a crowd of losers😥?

  44. acorn
    December 3, 2017

    You should Google “55 Tufton Street, London”. Interesting tenants.

    1. hefner
      December 4, 2017

      Is there a Beer Hall there?

  45. Rien Huizer
    December 3, 2017

    Those US tax cuts were long overdue. Hopefully the other side (fewer deductions) will survive the alignment process in Congress.

  46. rose
    December 3, 2017

    Thank you for sending the letter.

  47. Tabulazero
    December 3, 2017

    “The former cabinet ministers Iain Duncan Smith, Owen Paterson, Nigel Lawson and John Redwood have said it would be unacceptable for the European court of justice to have any jurisdiction over the UK during the planned two-year transition after Brexit.”

    Wouldn’t it strike you as exceptionally odd if for example the UK could initiate a legal action in front of the ECJ for a potential breach of the Single-Market rules during the transition period (who is to say if it will only last 2 years) but the reverse would not be true because the UK does not recognise the ECJ jurisdiction ?

    Even by the standards of logic that underpins the Brexit vote this must appear a little bit of a stretch, don’t you think ?

  48. Norman
    December 3, 2017

    The Brexit-bashers on this blog are getting noticeably more rattled. Increasingly, they resort to caricature, rather than producing genuine counter-arguments. Were they to get their way, in the course of time, such dissent would be stifled. Sigh – such is freedom.

    1. Norman
      December 4, 2017

      Sorry – I tried to cancel this comment – just my private thoughts really. Dissent can be healthy, with due allowance for human nature. But may cool, principled reason – and our freedom – prevail.

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