Low Taxes Equals Strong Economy

When it comes to taxes and revenues, I find it disturbing that many of the Democrats on a national and state level don't comprehend the Laffer Curve and the evidence that increasing taxes may give a short term revenue windfall but that the revenues will fall off later. After that the total collected will be less than before the taxes were raised, goading them to raise taxes even higher. Many states in the US have learned that lesson the hard way. Others will be learning it soon.

On the national level, House and Senate Democrats are working hard to kill the economic growth brought about by President Bush's 2003 tax cuts by making sure that the cuts aren't made permanent. (As if there were such a thing in Washington)

As former Delaware governor Pete Du Pont writes, despite the evidence that the tax cuts have almost quadrupled economic growth and increased tax revenues across the board, many congressional Democrats are working hard to reverse the gains of the past three years.

Opposing tax cuts has become the mantra of the liberal left. Sen. John Kerry wants to roll back Bush's "unaffordable tax cuts." Senator Mark Dayton (D., Minn.) called the cuts "dangerous and destructive and dishonorable." Bill Clinton in 2003 said the cuts were "way too big to avoid serious harm." And various New York Times editorials called them "economically unsound," claimed that "they will increase the deficit by hundreds of billions of dollars" and said they were unlikely "to stimulate the wallowing economy." Earlier this month House Minority Leader Nancy Pelosi promised that the election of a Democratic House in November would result in a "rollback of the tax cuts."

Of course they have it backwards. President Bush's personal income, capital gains and dividend tax rate reductions have created economic growth, significantly increased government tax receipts, and reduced the federal deficit by nearly $130 billion. As the New York Times was forced to admit in its front-page headline on July 9, a "Surprising Jump in Tax Revenues Curbs U.S. Deficit." But it isn't surprising at all; the truth is that when tax rates go down, economic activity goes up.

It appears that the Democrats want to return us to the status quo ante: reduce our economic growth from 4% back to 1.1% per year; do away with the additional $274 billion in tax revenues we've experienced; and bring the unemployment rate back up to 6.1%. I think they'll have a hard sell in making us believe that they're doing it for the average American working man or woman.

Part of the problem may be that the congressional Democrats think that they know better how to spend our money than we do. Therefore, if they can take more of it away from us they can spend it in our stead.

Let's make sure that we disabuse them of that notion.

No comments:

Post a Comment

Comments are welcome. However personal attacks, legally actionable accusations,or threats made to post authors or those commenting upon posts will get those committing such acts banned from commenting.