Skip to comments.Stop Lying About Tax Cuts by Herman Cain
Posted on 04/01/2006 9:45:20 AM PST by K-oneTexas
Stop Lying About Tax Cuts March 29, 2006 By Herman Cain
Every good liberal will tell you that low tax rates cause tax revenues to drop, hurt the economy, benefit only the wealthy and cause skyrocketing budget deficits. A Wall Street Journal article last week blew a hole in those liberal lies. The Journal reported that federal tax revenues for the first five months of fiscal year 2006 are up 10.3 percent from the same period a year ago. The 2006 revenue growth adds to a 15 percent tax revenue increase from 2004 to 2005. This good fortune for U.S. Treasury coffers is attributed to the steady and growing economy, which is largely a product of the 2003 cuts in income, dividend and capital gains tax rates.
The parallel growth in the economy and tax revenues is not a fluke and did not occur by chance. History has shown us that every time tax rates are cut, federal tax revenues rise, the economy responds positively and the wealthy pay a larger share of the tax bill.
Presidents Warren Harding and Calvin Coolidge significantly cut tax rates in the 1920s, which caused both the national economy and federal revenues to grow. Harding repealed the World War I excess profits tax, dropped the top tax rate on individuals from 73 to 58 percent and set the capital gains tax rate at 12.5 percent. Coolidge further reduced individual tax rates and inheritance taxes. The Harding and Coolidge tax rate cuts caused income tax revenues to rise 61 percent from 1921 to 1929. At the same time, the economy grew by 59 percent. Additionally, the share of taxes paid by the wealthiest Americans grew from just over 44 percent in 1921 to over 78 percent by 1928.
President John F. Kennedy introduced a plan in 1963 to lower the highest individual tax rate of 91 to 70 percent, and the top corporate rate from 52 to 48 percent. The Revenue Act of 1964, passed after Kennedys death, containted his proposed rate cuts and sparked considerable economic growth. Federal tax revenues rose 68 percent through 1968, and the economy grew 42 percent. The share of tax revenues paid by the wealthiest in the 1960s dwarfed the amounts paid by the middle class and poor. Tax revenues from those individuals making over $50,000 rose by 57 percent following the Kennedy rate cuts, while revenues from those making under $50,000 rose by just 11 percent.
When President Ronald Reagan came to office in 1981, the economy was mired in high interest rates, high unemployment and stagflation produced by policies of the 1970s. Reagan cut the highest individual tax rate in 1981 from 70 to 50 percent, and cut the lowest rate from 14 to 11 percent. In 1986 he further cut the top rate from 50 to 28 percent.
Reagans tax rate cuts helped produce the longest period of peacetime economic expansion in U.S. history. Total tax revenues grew by over 99 percent during the 1980s, and the economy grew by an average of 4 percent each year. As we saw in the 1960s, the wealthiest Americans paid the most taxes following Reagans rate cuts. The top 10 percent of income earners went from paying 48 percent of all taxes in 1981, to over 57 percent by 1988.
The other lie liberals perpetually tell is that low tax rates cause budget deficits. History proves just the opposite that cuts in income, capital gains and dividends tax rates increase the amount of federal revenues available for Congress to spend. The only thing that can cause a budget deficit is when Congress spends in excess of available revenues, and the president at the time signs off on that spending. Members of Congress who blame tax cuts for causing deficits might as well argue that gun manufacturers cause homicides, fast food restaurants cause obesity and cigarette makers cause lung cancer. Surely no one would agree with that flawed logic.
Fiscal conservatives who advocate low tax rates, and even complete replacement of the income tax code with a consumption tax, can be assured that they are on the right side of history, and the right side of economic common sense. Liberals of both political parties who decry low tax rates would harm our nations economic infrastructure, and the poor and wealthy alike.
Nearly everyone has a chance to succeed in our dynamic economy, provided that government does not confiscate their wealth through the tax code. As former President Abraham Lincoln once stated, That some should be rich shows that others may become rich and hence is just encouragement to industry and enterprise . . . I don't believe in a law to prevent a man from getting rich; it would do more harm than good.
© 2004 T.H.E. New Voice, Inc.
(I'm not a judge and there ain't enough of me to be a jury. (Zell Miller, A National Party No More))
Now we spend, borrow, and tax more. We should dynamically measure, tax at pro-growth rates and spend based on constraints of how much government the economy can fund. At dynamictaxscoring.com I analyzed historical tax data and synthesized it into The Laffer Curve graphically. Using this tool to transparently illustrate tax code changes on behavior, it succinctly proves how taxpayers will reap a 17% increase in effective income. In addition, the following new points are also made:
1) Currently, projected tax collections are not measured correctly. Tax code structure and rate changes have been incorrectly modeled and their affects on individual incentives to produce and create GDP growth are obliquely understood.
2) The 1974 and 1996 historical tax data illustrates and validates the Edward Prescott's (Nobel Prize in Economics, 2004) theoretical framework in a stark, visual picture for the reader without requiring one to read Prescott's powerful but heavy work.
3) A new and innovative graphical creation of the Laffer Curve linked to accelerated diminishing labor supply curve, proving the Laffer Curve with real tax data.
4) Innovative 'Tax Gap' graph, visually and dramatically showing the yawning gap between tax collections from static and dynamic scores.
5) This paper calls for greater transparency by providing annual tax impact statements (similar to social security) for all proposed tax code changes expressed in hard dollars. Truth in tax payments in hard dollars can be thought of in a similar way to APR as a measurement of borrower costs.
6) An effective pay increase of 17% for taxpayers for correctly scoring the feedback effects in lowering marginal tax rates to fully fund social security.
Please read more at http://dynamictaxscoring.com
Thanks for posting it!
HERMAN STRIKES AGAIN!
GREAT PIECE BY HERMAN CAIN!
I can't wait to hear what he has to say about McKinney today!
I'll ping ya'll in time for his show today at 5!
Thanks K-One for posting the article!
I've always wondered how it got to 91% in the first place. Which brilliant legislative body enacted that one?
Ummmm...the left does argue those very things...with constant repitition. And, at least out here on the left coast, majorities believe it...hook, line and sinker. It gives the left no problem whatsoever to argue that tax cuts cause deficits...and it gives large chunks of the American electorate no difficulty whatsoever believing it to be unassailable gospel. So now what?
It is stupifying that liberals run around saying the opposite of this article. The facts are there. One must simply read them.
But nooooo. The libs perpetually drink from the Rober Rubin Kool-Aid thermos that we need higher taxes to balance the budget now. Pitiful.
It was Wilson and FDR who pushed taxes to these levels for both wars and the depression.
VERE WELL PUT!
Please ping me....I hope he does say something to balance that dog and pony show she had yesterday.
Uhh...this is a joke, right?
Not that he's wrong, he's 100% right, but isn't this pretty much the DNC platform?
YOU BET DARLING!
I will ping you!
He's on at 5PM eastern? That's 1PM Alaska. I'll listen if I don't get busy.
I will ping ya-- BTW- YES that is 5 Eastern
YOU SO ROCK!
A Taxreform bump for you all.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer for additional information:
I just mean it's a joke that he says, "Surely nobody would agree with that flawed logic."
I was just poining out that, at the very least, a large section of Democrats believe agree with exactly that.
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