Less Taxes and More Tax Revenue
The late Daniel Patrick Moynihan once said: “You are entitled to your own opinion, but not to your own facts.” Many people do not want to take the time or spend the energy to learn the facts, but have no problem expressing their opinion. Willful ignorance is a real danger to our country. There is a myth that higher tax rates on the rich increases tax revenue. The following presents some basic facts as to why lower tax rates lead to greater tax revenues and economic success for all.
LESS TAXES AND MORE TAX REVENUE
“The best way to promote economic growth is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system—and this administration is pledged to an across-the-board reduction in personal and corporate income tax rates.” – John F. Kennedy 1963
“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 tax rates . . . . An economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits.” – John F. Kennedy, 1962, Address to the Economic Club of New York.
Not only do overall tax revenues increase when tax rates are cut, but during the whole period from 1981 through 2007, each time the tax rates were reduced, tax payments by the rich climbed. After the Reagan tax cuts in 1981, the richest 1 percent doubled their income tax payments from $50B in 1981 to $114B by 1988. Tax revenues from the rich accelerated even more after the 1986 tax cut to $146B in 1993, and after the 2003 tax cut, taxes from the rich increased from $256B to $451B in a four year period.
The story line that “there is an ever increasing gap between rich and poor” is also a myth, but the brevity of this email will not permit further explanation other than to point out one very important aspect of how this myth is perpetrated. During the years that owners operate and grow their businesses they are generally reported as statistics in the lower and middle classes, but when they sell their businesses, they are immediately put into the “rich class.” The statistics do not account for the lifetime of sweat equity and capital put at risk and all the years of no profits and low profits in many cases. One party wants you to know that “you did not build it” so what you reap at the end of that lifetime (or multiple generations of effort) should be redistributed through higher taxes for the benefit of those who did not put forth the effort or take the risk. Since this is a totally non-partisan letter, I will not say which party that is.
Only those who do not look at the facts and who can’t do the math are in favor of tax increases. Hopefully, if you share the foregoing information, some of those people will vote to restore economic freedom and give the lower and middle class a chance at moving up the ladder of success and, yes, even letting them get rich.
See the essay at: http://www.tsowell.com/images/Hoover%20Proof.pdf; and the book: Who’s The Fairest of Them All for additional facts and information on the effect of tax rates on tax revenues.