An Ol’ Broad’s Ramblings

April 14, 2007

Tax Cuts WORK!

Filed under: Opinion — olbroad @ 9:05

Case Closed
Fred Thompson

It’s that time again, and I was thinking of the old joke about paying your taxes with a smile. The punch line is that the IRS doesn’t accept smiles. They want your money.

So it’s not that funny, but there is reason to smile this tax season. The results of the experiment that began when Congress passed a series of tax-rate cuts in 2001 and 2003 are in. Supporters of those cuts said they would stimulate the economy. Opponents predicted ever-increasing budget deficits and national bankruptcy unless tax rates were increased, especially on the wealthy.

In fact, Treasury statistics show that tax revenues have soared and the budget deficit has been shrinking faster than even the optimists projected. Since the first tax cuts were passed, when I was in the Senate, the budget deficit has been cut in half.

Remarkably, this has happened despite the financial trauma of 9/11 and the cost of the War on Terror. The deficit, compared to the entire economy, is well below the average for the last 35 years and, at this rate, the budget will be in surplus by 2010.

Perhaps the most fascinating thing about this success story is where the increased revenues are coming from. Critics claimed that across-the-board tax cuts were some sort of gift to the rich but, on the contrary, the wealthy are paying a greater percentage of the national bill than ever before.

The richest 1% of Americans now pays 35% of all income taxes. The top 10% pay more taxes than the bottom 60%.

The reason for this outcome is that, because of lower rates, money is being invested in our economy instead of being sheltered from the taxman. Greater investment has created overall economic strength. Job growth is robust, overcoming trouble in the housing sector; and the personal incomes of Americans at every income level are higher than they’ve ever been.

President John F. Kennedy was an astute proponent of tax cuts and the proposition that lower tax rates produce economic growth. Calvin Coolidge and Ronald Reagan also understood the power of lower tax rates and managed to put through cuts that grew the U.S. economy like Kansas corn. Sadly, we just don’t seem able to keep that lesson learned.

Now, as before, politicians are itching to fund their pet projects with the short-term revenue increases that come from tax hikes, ignoring the long-term pain they always cause. Unfortunately, the tax cuts that have produced our record-breaking government revenues and personal incomes will expire soon. Because Congress has failed to make them permanent, we are facing the worst tax hike in our history. Already, worried investors are trying to figure out what the financial landscape will look like in 2011 and beyond.

This issue is particularly important now because massive, unfunded entitlements are coming due as the baby-boom generation retires. We simply cannot afford higher taxes if we want an economy able to bear up under the strain of those obligations. And beyond the issue of our annual federal budget is the nearly $9 trillion national debt that we have not even begun to pay off.

To face these challenges, and any others that we might encounter in a hazardous world, we need to maintain economic growth and healthy tax revenues. That is why we need to reject taxes that punish rather than reward success. Those who say they want a “more progressive” tax system should be asked one question:

Are you really interested in tax rates that benefit the economy and raise revenue–or are you interested in redistributing income for political reasons?

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4 Comments »

  1. One only need review Thompson’s voting record to see that he’s no fiscal conservative.

    http://www.ontheissues.org/senate/Fred_Thompson.htm

    Voted YES on prioritizing national debt reduction below tax cuts. (Apr 2000)

    Voted NO on 1998 GOP budget. (May 1997)

    Voted NO on removing common goods from national security export rules. (Sep 2001)

    Voted YES on banning “soft money” contributions and restricting issue ads. (Mar 2002)

    Voted YES on favoring 1997 McCain-Feingold overhaul of campaign finance. (Oct 1997)

    Voted YES on funding for National Endowment for the Arts. (Aug 1999)

    Voted NO on medical savings acounts. (Apr 1996)

    Voted YES on welfare block grants. (Aug 1996)

    Comment by Righty — April 14, 2007 @ 12:30

  2. […] Old Broad, suggesting Tax Cuts Work, and AsianBlogger, reprinting the entire article, point to a Wall Street Journal Op/Ed from fated […]

    Pingback by Lousy Liberal » Blog Archive » Builler…Builler… — April 15, 2007 @ 2:37

  3. Tax cuts have always worked. The left whines that the cuts only benefit the rich…while they only benefit those that actually PAY taxes. I guess that makes me rich.

    Comment by jarhead john — April 15, 2007 @ 6:30

  4. Sadly JJ, the left just doesn’t see it that way. They complain there aren’t enough jobs, so they tax those who could create the jobs to the point that more jobs are lost. Of course, they must be the proper type jobs…no Walmart jobs are good enough, even though a person working at Walmart would be paying taxes. It’s an ugly cycle. One that the oblivous left fails to recognize because they “want to feeeeeel good”. If you have a dollar in your pocket, they want it to give to someone else, usually a cracked out ho with 6 kids from 6 different fathers, who can’t put a coherent thought together.

    Comment by olbroad — April 15, 2007 @ 8:42


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