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The Real History of Tax Cuts November 26, 2012 9:00 AM | Tagged as Keynesian Tax Cuts
WSJ 11/16/2012 A17 Why Lower Tax Rates are Good for Everyone By Stephen Moore
Once again, Stephen Moore sets the record straight. Mr. Moore is a brilliant economist and editorial writer for the Wall Street Journal. In this piece, he make the point, “If we want millionaires to pay more taxes, then we need an economy where there are more millionaires.”
A look at the history of tax rates shows some interesting observations. As Moore writes, “Over the past century, lower rates have shifted the tax burden onto high-income earners and away from the middle class while maintaining the tax code's progressivity.” This includes Coolidge, JFK, Reagan, and Bush43.
Let’s start with the Roaring Twenties. Why was it roaring? Tax Cuts were a major part of the story. A simple point often not cited by those who wish to squash history to support their own Keynesian narrative. Coolidge lowered rates, the economy grew and the affluent paid more tax revenues.
Then FDR raised taxes during the Great Depression and during World War II. The economy was held back by these high rates.
In the 1960’s JFK lowered rates, citing this would boost the economy. It did, from 1965 to 1968. Again, the rich paid more.
Then, Reagan lowered tax rates during his first term and, during his second, closed loopholes and lowered the top tax rate again. As predicted, the economy soared. The so-called rich paid even more taxes as a percent of total tax revenues.
The Bush43 tax cuts repeated the cycle, although spending went nuts. Nonetheless, the economy grew.
Only during the Clinton administration did taxes go up while the economy grew. Clinton enjoyed the advantage of the peace dividend. The growth would have been more had Clinton not raised taxes.
Obama is taking us down the opposite road. Raising taxes will surely hurt all Americans, particularly those that need help the most. Keynesian ideology has no track record of success.
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