Economist Dan Mitchell highlights the extension of the 2017 personal tax cuts and new provisions related to Social Security, overtime and tips. He emphasizes that the most significant pro-growth element of the new bill is the move toward expensing, which reduces the "tax penalty" on new investments, a concept he considers the "crown jewel" of the legislation.
Mitchell explains that expensing allows businesses to fully deduct investment costs from revenue to calculate profit, unlike depreciation, which mischaracterizes some investment expenses as profits. He also draws on the Laffer Curve and Reagan-era tax cuts to argue that lower taxes on productivity-related activities lead to more economic growth and can sometimes even increase revenue, citing a five-fold increase in revenue from high-income earners after the 1980s tax cuts. Ultimately, Mitchell's main concern is not the deficit itself, but the underlying issue of excessive government spending, which he believes is the root cause of the nation's fiscal problems.
