Spring Break
McCain is the Smart Vote for the Economy
Dale Winger (NJ), Contributing Writer
Issue date: 10/27/08 Section: Viewpoints
The middle class may be slow to embrace the Obama economic plan for good reason. It defies the policy lessons learned from 50 years of economic expansion in the United States. John McCain offers a plan to incent businesses, entrepreneurs, and foreign investment leading to economic growth, job creation, and higher wages.
Barack Obama claims that our economy is now feeling the effects of eight years of President Bush's failed economic policy and President Reagan's supply-side policies that "never trickled down". Liberal dogma imbues Senator Obama's economic policy, instead of the historical relationship between tax rates, treasury revenues and economic growth. The middle class is slow to embrace Obama's plan for working families because it defies what we have learned from fifty years of economic expansion.
In 1962, President John F. Kennedy told Congress that the federal tax burden reduced the financial incentives for personal effort, investment, and risk-taking. He proposed the largest tax cut in American history with rate reductions not only for low-income workers, but as he told Congress "for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and ... invest more capital." President Kennedy reduced the top marginal rate by 21%, and the nation's economy expanded by 20% over the next three years.
In 1981, President Reagan inherited 7.6% unemployment and 13.5% inflation. His signature legislation cut the top marginal rate by another 20% (to 50%) and reduced taxes across the board. When President Reagan left office, unemployment was 5.5%, inflation tamed at 4.1%, and the American economy was 30% larger than it was when he came to Washington.
The other impact of lower tax rates is higher treasury revenues. When President Clinton cut the capital gains tax rate from 28% to 20% in 1997, capital gains receipts doubled in four years. When President Bush again cut the capital gains rate to 15% in 2003, capital gains tax revenues doubled. The pattern is clear. Economic growth is a more useful tool for increasing treasury revenues, than higher tax rates. Senator Obama claims to understand this, but says we need more fairness. While his plan is crafted to increase fairness, it will not do much for growth, which means it is likely to produce neither.
Barack Obama claims that our economy is now feeling the effects of eight years of President Bush's failed economic policy and President Reagan's supply-side policies that "never trickled down". Liberal dogma imbues Senator Obama's economic policy, instead of the historical relationship between tax rates, treasury revenues and economic growth. The middle class is slow to embrace Obama's plan for working families because it defies what we have learned from fifty years of economic expansion.
In 1962, President John F. Kennedy told Congress that the federal tax burden reduced the financial incentives for personal effort, investment, and risk-taking. He proposed the largest tax cut in American history with rate reductions not only for low-income workers, but as he told Congress "for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and ... invest more capital." President Kennedy reduced the top marginal rate by 21%, and the nation's economy expanded by 20% over the next three years.
In 1981, President Reagan inherited 7.6% unemployment and 13.5% inflation. His signature legislation cut the top marginal rate by another 20% (to 50%) and reduced taxes across the board. When President Reagan left office, unemployment was 5.5%, inflation tamed at 4.1%, and the American economy was 30% larger than it was when he came to Washington.
The other impact of lower tax rates is higher treasury revenues. When President Clinton cut the capital gains tax rate from 28% to 20% in 1997, capital gains receipts doubled in four years. When President Bush again cut the capital gains rate to 15% in 2003, capital gains tax revenues doubled. The pattern is clear. Economic growth is a more useful tool for increasing treasury revenues, than higher tax rates. Senator Obama claims to understand this, but says we need more fairness. While his plan is crafted to increase fairness, it will not do much for growth, which means it is likely to produce neither.
Be the first to comment on this story