Saturday, July 16, 2011
Would you rather have a big slice of a small apple, or a small slice of a big apple? If government truly wants to increase its revenue, it should go with lower tax rates in a robust economy. Lowering tax rates increases revenue. Unfortunately, President Obama does not understand this. He is either misinformed, misguided, or mistaken.
"President Obama on Friday (July 15) kept up the pressure on Republicans to agree to revenue increases in a deal to raise the debt ceiling, claiming 80 percent of the public supports Democrats' demand for tax increases. Throughout the press conference, Obama blasted Republicans for ignoring what he said is the will of the American people by rejecting tax increases that would balance out spending cuts in a debt package." Link
It is too bad President Obama doesn't look to President Reagan or President Kennedy for prudent advice on this matter.
In a speech to the Economic Club of New York delivered on December 14, 1962, President Kennedy wisely advised:
"In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve, I believe — and I believe this can be done — a budget surplus. The first type of deficit is a sign of waste and weakness; the second reflects an investment in the future."