Tax Cut Professionals
By admin | March 17, 2010 | In Category: General, Tax Policy
Today we are faced with tax hike after tax hike. Politicians from the local level all the way up to the tax champions at the Federal level respond to shrinking revenues in identical fashion: Raising taxes. John Stossel says the reason people don’t understand free markets is that they are counter-intuitive. He’s right. Raising taxes seldom, if ever, leads to long term revenue gains. Yet time and again, politicians assume that by making one group or another pay just a little more, they can achieve budget parity.
In the past, even Democrats didn’t think that way. Of the post-WWII tax cutting Presidents, three tax cutters stand out above the rest: JFK, Reagan, and Bush. The Tax Foundation has posted hard analysis of all three. The report shows that JFK’s cuts were the biggest of the three:
“Contrasting the size of the tax cuts with national income shows that the Kennedy tax cut, representing 1.9 percent of income, was the single largest first-year tax-cut of the post-WW II era. The Reagan tax cuts represented 1.4 percent of income while none of the Bush tax cut even breaks 1 percent of income. The Kennedy tax cuts would only have been surpassed in size by combining all three Bush tax cuts into a single package.”
It’s interesting to note that while Democrats relentlessly cry about the Bush tax cuts, you would have to combine all of them into one package to beat JFK’s tax cuts. He understood something about the markets and the economy that today’s politicians mostly miss. The economy will thrive when it’s workers are free to keep as much of their money as possible. Don’t be confused, Kennedy was liberal. He argued for all the typical liberal spending preferences (education, medical care, and so forth), but he didn’t let his liberal social agenda confuse him into thinking the government could actually prosper at the expense of its citizens.
Reagan’s cuts come in at a respectable second place. They had a similar effect of relieving the nation of its recession and actually served to boost government revenues from $244B to 446B by 1989. Bush’s cuts, while small by comparison, did have a stimulative effect as well. However, the effect of these cuts was blunted by the fact that the cuts were split into three rounds. One can speculate that if they had been combined the effect might have been greater.
Today’s leaders have much to learn. Rather than punishing upper income earners and making them into objects of ridicule and hatred, our Tax Cut Professionals let them keep more of their money and our economy has always benefited from it.
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