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Stop Lying About Tax Cuts by Herman Cain
The New Voice ^ | March 29, 2006 | 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 Harding repealed the World War I excess profits tax, dropped the top tax rate on individuals from 73 to 58 percent and set the capital gains tax rate at 12.5 percent.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 Kennedy’s 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.

Reagan’s 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 Reagan’s 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 nation’s 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.


TOPICS: Business/Economy; News/Current Events
KEYWORDS: fairtax; hermancain; laffer; nrst; reaganomics; supplyside; taxcuts; taxes; taxreform
Good article. Several authors posted here are favorites, Herman Cain is one of them. I enjoy the simple down to earth way he states the obvious (that many of us tend to overlook or do not vocalize).

(I'm not a judge and there ain't enough of me to be a jury. (Zell Miller, A National Party No More))

1 posted on 04/01/2006 9:45:23 AM PST by K-oneTexas
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To: K-oneTexas

bump


2 posted on 04/01/2006 9:46:06 AM PST by satchmodog9 (Most people stand on the tracks and never even hear the train coming)
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To: satchmodog9

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


3 posted on 04/01/2006 9:51:00 AM PST by JR Reyling (http://dynamictaxscoring.com)
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To: K-oneTexas

YAY!

Thanks for posting it!

HERMAN STRIKES AGAIN!

WOOOOOHOOOOOOOOOOO!


4 posted on 04/01/2006 9:58:23 AM PST by eeevil conservative (I'm not racist- I'm an Equal Opportunity Enemy of ALL LAWBREAKING, TAX DODGING, FENCE CLIMBERS!)
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To: freeangel; MNJohnnie; rodguy911; SittinYonder; groanup; Fudd Fan; Peach; FreedomPoster; ...

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!

YOU ROCK!


5 posted on 04/01/2006 10:02:09 AM PST by eeevil conservative (I'm not racist- I'm an Equal Opportunity Enemy of ALL LAWBREAKING, TAX DODGING, FENCE CLIMBERS!)
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To: Mycroft Holmes; diotima; Bob J; expat_panama; MinuteGal

ping


6 posted on 04/01/2006 10:03:48 AM PST by JR Reyling (http://dynamictaxscoring.com)
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To: K-oneTexas
"President John F. Kennedy introduced a plan in 1963 to lower the highest individual tax rate of 91 to 70 percent...."

I've always wondered how it got to 91% in the first place. Which brilliant legislative body enacted that one?

7 posted on 04/01/2006 10:05:49 AM PST by oprahstheantichrist (...or false prophet at the very least.)
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To: K-oneTexas
A lawyer told my sil/bil he now votes republican because of death tax. IMO Republicans should talk more about doing away with this tax. Permanently.
8 posted on 04/01/2006 10:13:29 AM PST by BARLF
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To: K-oneTexas
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.

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?

9 posted on 04/01/2006 10:19:22 AM PST by Scott from the Left Coast
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To: eeevil conservative
Thanks for the ping ee.

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.

10 posted on 04/01/2006 10:24:21 AM PST by groanup (Shred for Ian)
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To: oprahstheantichrist

http://www.freerepublic.com/focus/f-news/1226265/posts#fn-2

It was Wilson and FDR who pushed taxes to these levels for both wars and the depression.


11 posted on 04/01/2006 10:25:44 AM PST by JR Reyling (http://dynamictaxscoring.com)
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To: groanup

AMEN!

VERE WELL PUT!

;-)


12 posted on 04/01/2006 10:29:21 AM PST by eeevil conservative (I'm not racist- I'm an Equal Opportunity Enemy of ALL LAWBREAKING, TAX DODGING, FENCE CLIMBERS!)
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To: eeevil conservative

Please ping me....I hope he does say something to balance that dog and pony show she had yesterday.


13 posted on 04/01/2006 10:42:21 AM PST by Txsleuth
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To: K-oneTexas
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.

Uhh...this is a joke, right?

Not that he's wrong, he's 100% right, but isn't this pretty much the DNC platform?

14 posted on 04/01/2006 10:59:39 AM PST by zbigreddogz
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To: zbigreddogz
I think ... I know what he is trying to say is that there is not a direct correlation between the two.

For some people and the Democrat Party platform cause means equals so: tax cuts = deficit; gun manufacturers = homicides; McDonalds et al = obesity; tobacco manufacturers = lung cancer.

Most people realize that some correlation exits but not total. I don't think it is a joke ... the joke is that many people don't care to hear the facts. They'd prefer to be told something and just restate it.

Facts after all have a way of tipping the apple cart and messing things up. Doesn't matter where, be it politics, ideas or even at home.
15 posted on 04/01/2006 11:11:51 AM PST by K-oneTexas (I'm not a judge and there ain't enough of me to be a jury. (Zell Miller, A National Party No More))
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To: Txsleuth

YOU BET DARLING!

I will ping you!


16 posted on 04/01/2006 11:24:49 AM PST by eeevil conservative (I'm not racist- I'm an Equal Opportunity Enemy of ALL LAWBREAKING, TAX DODGING, FENCE CLIMBERS!)
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To: eeevil conservative

BTTT.

He's on at 5PM eastern? That's 1PM Alaska. I'll listen if I don't get busy.


17 posted on 04/01/2006 11:44:17 AM PST by hattend (Let's unpimp the Democrat Party!)
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To: hattend

COOL!

I will ping ya-- BTW- YES that is 5 Eastern

;-)

YOU SO ROCK!


18 posted on 04/01/2006 11:45:16 AM PST by eeevil conservative (I'm not racist- I'm an Equal Opportunity Enemy of ALL LAWBREAKING, TAX DODGING, FENCE CLIMBERS!)
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To: K-oneTexas; Taxman; pigdog; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; ...
The burden of high bracket rates on production increases as the square of the tax rate imposed (the burden quadruples for a doubling of the marginal rate.)

Focus those taxes on the most productive components of our business and investment infra-structure, as the graduated income tax does, and that effect can be devestating to an economy.

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.

H.R.25,S.25
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:


19 posted on 04/01/2006 12:30:53 PM PST by ancient_geezer (Don't reform it, Replace it.)
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To: K-oneTexas

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.


20 posted on 04/01/2006 12:54:26 PM PST by zbigreddogz
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To: K-oneTexas
"the joke is that many people don't care to hear the facts."

they don't care to hear the facts b/c that would make them personally responsible....it is soooo much easier and lucrative (via trial lawyers) to blame someone else.
21 posted on 04/01/2006 1:44:21 PM PST by socialismisinsidious ( The socialist income tax system turns US citizens into beggars or quitters!)
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To: ancient_geezer; All
The fair tax would solve the problem anyway.

Fair tax bump.

Herman Cain if one of the fair tax's biggest supporters.

Listen to Herman at 5:00 today. As he puts it: "you just might learn something".

22 posted on 04/01/2006 2:00:43 PM PST by groanup (Shred for Ian)
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To: groanup; All

HE'S ON RIGHT NOW!

HERE'S YOUR STREAMFEED:
http://www.streamaudio.com/listen/cox.asp?station=WSB_AM&headertext=News-Talk%20750%20WSB


23 posted on 04/01/2006 2:11:56 PM PST by FreeKeys (The folks at the IRS are regular people just like you, except they can destroy your life.-DaveBarry)
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To: beaversmom

pong


24 posted on 04/01/2006 2:53:32 PM PST by Principled
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To: K-oneTexas

And Bruce Bartlett ought to be included as one of those telling the lies. I'm amazed by the guy - claiming to be a supply-side economist and a conservative himself and bashing the president for not be a conservative. I think all that qualifies BB as being both a liberal and a demand-sider.


25 posted on 04/01/2006 7:19:48 PM PST by n-tres-ted (Remember November!)
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To: groanup
It is stupifying that liberals run around saying the opposite of this article. The facts are there. One must simply read them.

It's not surprising considering they are socialists. Socialists believe in a strong centralized government that takes power from the individual and gives it to the minority who run the government. One effective way to take away an individual's power is by taking their money. They read the facts but don't like them because the facts don't fit the socialist agenda and that includes the Fair Tax.
26 posted on 04/02/2006 5:22:27 AM PDT by Man50D
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To: Man50D
Socialists believe in a strong centralized government that takes power from the individual and gives it to the minority who run the government

The economy is so effective at building assets that the minority that runs the government is growing in numbers and wealth. With their massive urban voting blocks and free-health-care-for-all promise, they continue to bet on denial of economic realities.

27 posted on 04/02/2006 5:51:44 AM PDT by alrea
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To: n-tres-ted

Some of the naysayers on these threads are BB fans and disciples.

At least Cain is right on the money!!


28 posted on 04/02/2006 7:58:19 AM PDT by pigdog
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To: n-tres-ted
And Bruce Bartlett ought to be included as one of those telling the lies. I'm amazed by the guy - claiming to be a supply-side economist and a conservative himself and bashing the president for not be a conservative.

You apparently haven't caught on to the fact that he has subscribed to the John McCain school of self promotion. Such behavior gets him lots of attention from the lame stream media and that is ALL he is after!

29 posted on 04/02/2006 10:13:03 AM PDT by Bigun (IRS sucks @getridof it.com)
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To: Bigun

You're right, Bigun, and I have caught on. But I'm still amazed that a guy who knows better would become such a turncoat.


30 posted on 04/02/2006 10:35:39 AM PDT by n-tres-ted (Remember November!)
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To: pigdog

The numbers of Bush bashers on FR is disappointing, to say the least. I hate to think they are real Republicans looking for another way to shoot themselves in the foot, a la Perot.


31 posted on 04/02/2006 10:38:18 AM PDT by n-tres-ted (Remember November!)
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To: K-oneTexas
"t 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."

As Rush says; It happens everytime it's tried!

32 posted on 04/02/2006 10:45:53 AM PDT by patriot_wes
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To: K-oneTexas

This is interesting... also its interesting that the President's own Council of Economic Advisors have stated that the economic stimulus of a tax cut is not sufficient to replace the revenues lost via a cut.


33 posted on 04/05/2006 8:07:46 AM PDT by eraser2005
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To: eraser2005

They've always said stuff like that ... and they've always been wrong.


34 posted on 04/05/2006 8:00:18 PM PDT by pigdog
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