Category Archives: Tax Increase
As far back as the 1920s, a huge cut in the highest income tax rate — from 73 percent to 24 percent — led to a huge increase in the amount of tax revenue collected by the federal government. Why? Because investors took their money out of tax shelters, where they were earning very modest rates of return, and put their money into the productive economy, where they could earn higher rates of return, now that those returns were not so heavily taxed.
This was the very reason why tax rates were cut in the first place — to get more revenue for the federal government. The same was true, decades later, during the John F. Kennedy administration. Similar reasons led to tax rate cuts during the Ronald Reagan administration and the George W. Bush administration.
All of these presidents — Democrat and Republican alike — made the same argument for tax rate reductions that had been made in the 1920s, and the results were similar as well. Yet the invincible lie continues to this day that those who oppose high tax rates on high incomes are doing so because they want to reduce the taxes paid by high income earners, in hopes that their increased prosperity will “trickle down” to others.
Eat the Rich Video by Bill Whittle [discussed in Walter Williams article, also entitled Eat the Rich.]
Democrats are arguing to keep something they said never existed.
- According to the Congressional Budget Office, the entire package, as currently proposed in the Senate, would add $858 billion to the 2011-2020 deficit.
- Of that $858 B, about $544 B comes from keeping current tax rates; the rest comes from the new goodies unrelated to the Bush rates.
- The CBO calculates future revenues under the assumption that tax rates have zero effect on the behavior of investors, consumers, employers, etc.
- “(T)op Democrats say we must keep the Bush tax rates or the recession resumes.
- Pres. Obama says that “‘economists from all across the political spectrum agree’ on that. I believed he polled the same economists who said his stimulus would keep the unemployment rate below 8%.”
- As a matter of record, the final Bush tax rates passed Congress in mid-2003, shortly after Republicans retook the Senate.
- From August 2003 to December 2007, over eight million net new jobs were created;
- real GDP grew almost 3% per year.
- At that same time, federal revenues increased by 2.3% of GDP ($785 B), putting revenues above the average level of 1960-2000, the forty years before Bush.
- Unemployment fell to 4.4%,
- and the deficit fell to 1.2% of GDP. Such was the catastrophe of four years of Bush’s tax rates and Republican-written federal budgets.
- We are currently in the worst recession/possible depression of my 53 year lifetime.
- Water rates are going up 30%.
- Housing Appraisals have skyrocketed. No property tax increases? Maybe politicians think so–property owners know better!