From JFK To Bush, Treasury Swelled After Tax Cuts
Posted 10/17/2012 06:58 PM ET
President
Obama warned that GOP hopeful Mitt Romney's proposed income-tax cuts
will "cost" the government revenue and repeat Bush policies that he says
blew up the deficit.
"The centerpiece of his economic plan are tax cuts," Obama said at Tuesday's presidential debate in New York. "That's what took us from surplus to deficit."
He called Romney's tax plan "sketchy," because it promises to raise revenues while slashing personal tax rates from top to bottom. His debate sparring partner, Democratic Sen. John Kerry, went further, calling it a "fraud."
The Obama camp has strenuously opposed Romney's pro-growth strategy, arguing that tax breaks, especially for the wealthy, "rob" programs for the middle class and poor because they don't raise revenues and don't "pay for themselves."
"It has never been done before," Vice President Joe Biden insisted in last week's debate with Romney running-mate Paul Ryan.
"It's been done a couple of times, actually," Ryan shot back.
The data bear out Ryan. In fact, the White House's own numbers put a big wrinkle in its argument.
The historical tables in the back of the latest "Economic Report of the President" show that the Bush tax cuts generated more, not less, federal revenues — a phenomenon that also held true for Presidents Clinton, Reagan and Kennedy.
All
four leaders, two Republicans and two Democrats, slashed taxes for top
individual earners or investors. And once these rate reductions took
effect and began stimulating economic activity, record individual
income-tax receipts poured into the U.S. Treasury. (See the charts
above.) Revenues increased even after adjusting for inflation and
population growth.
Kennedy
Kennedy's major tax cut, which included chopping the top marginal rate to 70% from 91%, became law in early 1964, after his untimely death. It promised to grow the economy and close the budget gap.
"Coming at a time of substantial deficit in the federal budget, this was a startling proposal to many observers," said New York University economist Richard Sylla, co-author of "The Evolution of the American Economy."
To the shock of many naysaying Democrats, the plan worked. The economy grew at an average 5.5% clip, and unemployment fell to 3.8%. In turn, the annual deficit shrank to $1 billion from $7 billion as individual income-tax receipts nearly doubled. (See the chart.)
"Rising income more than offset the decline in income tax rates as far as federal revenue was concerned," Sylla said.
Kennedy and his supply-side advisers "could point to those few who remained unpersuaded that despite the tax cuts — or rather because of the tax cuts — the federal deficits of fiscal 1965 and 1966 were substantially reduced from 1962-64 levels."
"The centerpiece of his economic plan are tax cuts," Obama said at Tuesday's presidential debate in New York. "That's what took us from surplus to deficit."
He called Romney's tax plan "sketchy," because it promises to raise revenues while slashing personal tax rates from top to bottom. His debate sparring partner, Democratic Sen. John Kerry, went further, calling it a "fraud."
The Obama camp has strenuously opposed Romney's pro-growth strategy, arguing that tax breaks, especially for the wealthy, "rob" programs for the middle class and poor because they don't raise revenues and don't "pay for themselves."
"It has never been done before," Vice President Joe Biden insisted in last week's debate with Romney running-mate Paul Ryan.
"It's been done a couple of times, actually," Ryan shot back.
The data bear out Ryan. In fact, the White House's own numbers put a big wrinkle in its argument.
The historical tables in the back of the latest "Economic Report of the President" show that the Bush tax cuts generated more, not less, federal revenues — a phenomenon that also held true for Presidents Clinton, Reagan and Kennedy.
Kennedy
Kennedy's major tax cut, which included chopping the top marginal rate to 70% from 91%, became law in early 1964, after his untimely death. It promised to grow the economy and close the budget gap.
"Coming at a time of substantial deficit in the federal budget, this was a startling proposal to many observers," said New York University economist Richard Sylla, co-author of "The Evolution of the American Economy."
To the shock of many naysaying Democrats, the plan worked. The economy grew at an average 5.5% clip, and unemployment fell to 3.8%. In turn, the annual deficit shrank to $1 billion from $7 billion as individual income-tax receipts nearly doubled. (See the chart.)
"Rising income more than offset the decline in income tax rates as far as federal revenue was concerned," Sylla said.
Kennedy and his supply-side advisers "could point to those few who remained unpersuaded that despite the tax cuts — or rather because of the tax cuts — the federal deficits of fiscal 1965 and 1966 were substantially reduced from 1962-64 levels."
Read More At IBD: http://news.investors.com/ibd-editorials-perspective/101712-629790-data-debunk-deficit-exploding-tax-cuts-myth.htm#ixzz2A07iempW
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