Why Democrats must go back to school on taxes
S E E D E D C O N T E N T
Try explaining marginal tax cuts to a room of 5th graders.
Once, on Ronald Reagan ’s birthday, I tried to explain what the top rate was like before our 40th president took office. “Imagine doing some chores for your grandparents,” I said, “and your grandma gives you $10. Then, when you get home, your parents take $7 from you. That’s what the tax rates were like before President Reagan took office.
The students immediately said that wasn’t fair.
Even 5th graders get it.
The last time the top tax rate was 70 percent was back in the days when President Jimmy Carter talked about a country in a malaise. Now, socialists like Rep. Alexandria Ocasio-Cortez (AOC) and Sen. Ed Markey want to bring that top tax rate back as part of the so-called “Green New Deal.”
AOC’s response when I tweeted about the fact that even 5th graders realized that wasn’t fair was to suggest that only a limited number of people would pay the tax. It reminded me of when former British Prime Minister Margaret Thatcher said, “the problem with socialism is that you eventually run out of other people’s money” to spend.
Politicians in Maryland helped make that point years ago when they passed a “millionaire tax” presumably to soak the “rich.” Apparently, the targeted taxpayers decided to flee and revenue projections were not met. Eventually, the governor proposed a new tax on households making $100,000 or more.
Think about that: The income of a fire fighter and a nurse could easily exceed $100,000 (particularly on the East Coast). Hardly wealthy. Uncontrolled spending in Maryland eventually hurt the middle class. Sooner or later they ran out of other people’s money to spend.
History is full of examples like that.
Remember the federal budget deal in 1990 that increased taxes on “luxury” items?
So who got hurt by the tax? According to a Wall Street Journal editorial, “Yacht retailers reported a 77 percent drop in sales that year, while boat builders estimated layoffs at 25,000.” All of the fuss about sticking it to the rich really just ended up hurting the thousands of middle-class workers and their families who got pink slips.
The taxes also took in $97 million less than had been projected for the first year. Consumers were buying fewer of the “luxury” items — or at least not buying them in America. In effect, the socialist dream of taking from the wealthy ended up hurting sales, which lead to massive layoffs and revenue projections that missed the mark.
Conversely, tax reductions have consistently had a positive impact on the economy.
Tax rates were cut several times during President Reagan ’s tenure and America enjoyed many years of economic recovery. Plus, revenues continued to go up.
Revenues also continued to grow under the tax cuts proposed by President John F. Kennedy in the 1960s and during and around the Coolidge era in the 1920s. Liberals and many in the media (sometimes hard to discern which is which) mistakenly believe that lower taxes produce a reduction in revenues. History suggests otherwise.
But taxes are about more than just fiscal and economic policy. They are really about freedom.
Take Sen. Elizabeth Warren’s Wealth Tax, for example. It’s not enough to just raise taxes on income, now they want to tax your savings, too.
To me, that is like telling a straight “A” student that she must share her grades with the other students. Rightly so, she would say this is not fair.
Instead of stealing from her, why not help each of the other students do better?
As President Reagan said, “the weakness in this country for too many years has been our insistence of carving an ever-increasing number of slices from a shrinking economic pie. Our policies have concentrated on rationing scarcity rather than creating plenty.”
Instead of fighting over who gets the last piece of shrinking economic pie, let’s help the people of our country produce a bigger pie so that everyone will have a chance to live a better life. That is a uniquely American idea.
We are blessed to live in the land of equal opportunity, but the outcome is still up to each of us. True freedom and prosperity do not come from the clumsy hand of the government. They come from people being able to control their own life and their own destiny through the dignity that is born of work.
As policy makers consider tax increases or tax cuts, I hope they will remember these simple facts. Lest they forget we celebrate the 4th of July and not April 15th, because, in America, we celebrate our independence from the government and not our dependence on it.
• Scott Walker was the 45th governor of Wisconsin. You can contact him at [email protected] or follow him @ScottWalker.
The Washington Times https://m.washingtontimes.com/news/2019/mar/21/why-democrats-must-go-back-to-school-on-taxes/#gallery_1
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The gop's irresponsible tax cuts for the wealthy gave us trillion dollar deficits, again.
When the next recession hits there will be nothing left fiscally to do that can fix it...
We will not even be able to increase spending or cut taxes to stimulate the economy.
Reaganomics and trickle down still does nothing but make the rich richer and the poor poorer.
Funny how the Reagan tax cuts that took us from a top marginal rate of 70% down to 25% and then finally settled at 28% caused Federal Revenue to double by the time Reagan left office. Right now, our top tax rate is 40.8%, which is drop of less than 3% from the PPACA top tax rate of 43.4%
is the link for the following revenue chart:
The GOP stuck it to the country. American's were looking for, and promised there would be, tax REFORM. Gone would be the days of corporations paying zero dollars in taxes, they'd be paying their "fair share". In exchange they'd get lower rates (who knew in perpetuity). Our trough, for 10 years.
Trickle down alright...pretty certain I know where the faucet is and trust me that's not water washing over our fields of grain.
The seed link is broken; here is a working link to Scott Walker's predigested pablum: Why Democrats must go back to school on taxes
The idea that tax cuts increases Federal Revenue is a lie built upon a lie. Notice that Walker (like other neo-liberals) have been forced to draw on bizarre examples, like luxury yachts, to cite harm done by tax increases. Why can't neo-liberals show the harm done to real manufacturing, like toasters or washing machines? Frankly working Americans don't care about the luxury yacht business; working Americans are more interested in the real economy rather than the bizarre economy.
So, how could Reagan cut taxes on the wealthy and honestly expect Federal tax revenue to increase? That charlatans trick is not difficult to explain. The size of the US labor force was increasing, labor participation rates were going up, and Reagan increased FICA taxes.
The size of the US labor force increased from 106 million in 1980 to 126 million in 1990 ( Civilian Labor Force - FRED ). The labor participation rate increased from 64 pct in 1980 to 67 pct in 1990 ( Civilian Labor Force Participation Rate - FRED ). The number of working Americans paying taxes (particularly FICA taxes) increased by 16 pct between 1980 and 1990.
While it's true that income taxes are the largest Federal revenue stream, it is also important to recognize that income taxes provide less than half of Federal Revenue. ( Current US Federal Government Tax Revenue ) So, even if the wealthy pay half of Federal income taxes that only provides 1/4 th of Federal revenue. American workers pay more overall taxes than do the wealthy. Deliberately ignoring the revenue stream from FICA taxes is a charlatan's trick.
More workers, more jobs, and higher wages increase Federal revenue. That's what the real data shows. The neo-liberal hokum-smokum of the 1980s won't work today because the United States isn't seeing a large increase in the number workers, number of jobs, or higher wages. The United States has lost a lot of manufacturing capacity since 1980. Capitalism died a quiet death after 1980. The United States has lost its ability to produce, manufacture, and compete.
The neo-liberal charlatans are reduced to trying to lie their way out of the mess by convincing American workers they should be worried about luxury yachts.
So, is this article unlocked now? I also posted the seed because I wanted to discuss the issue. Since this one is open now, I'll delete mine.