In promoting his economic program in the early 1960s, President Kennedy told the American people,
“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….[A]n 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.”
“Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other….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, produce revenues, and achieve a future budget surplus.”
Kennedy explained further that 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.”
Kennedy actually proposed and campaigned on an income tax rate cut of roughly 30% across the board, at all income levels. That served as the model for the tax rate cuts promoted by Jack Kemp in the late 1970s, which were adopted by Reagan in the 1980 campaign, and later implemented after he became President.
Kennedy’s proposed tax rate cuts were adopted in 1964, after his 1963 assassination. Kennedy’s plan cut the top income tax rate from 91% to 70%, and reduced the lower rates by similar magnitudes. The bottom rate was cut from 20% to 14%.
In response, the economy and federal tax revenues boomed until the end of the decade. By 1966, unemployment had fallen to its lowest peacetime level in almost 40 years! U.S. News and World Report exclaimed, “The unusual budget spectacle of sharply rising revenues following the biggest tax cut in history is beginning to astonish even those who pushed hardest for tax cuts in the first place.” Arthur Okun, the administration’s chief economic advisor, estimated that the tax cuts expanded the economy in just two years by 10% above where it would have been.
But all we have gotten from President Obama is higher tax rates for almost every major federal tax. On January 1, 2013, the Bush tax cuts of 2001 and 2003 were extended for everyone, including the middle class, the “working class,” and the poor, except for the top 3% of income earners, which suffered a major tax increase as a result. The same top 3% also suffered the new Obamacare taxes going into effect at the same time, even though the so-called “rich” already pay far more than their fair share of income taxes.
As a result, the tax rate for capital gains increased by nearly 60%, as did the tax rate on corporate dividends. Income tax rates on the disfavored taxpayers increased by nearly 20%. Those disfavored taxpayers can be otherwise called the nation’s employers, investors and successful small businesses. In other words, the sources of America’s jobs. But our career “community organizer” President doesn’t understand anything about the sources of America’s jobs.
Moreover, under President Obama, America’s marginal corporate income rate, at nearly 40% counting state corporate income taxes, is now the highest among all advanced economies, with no relief in sight. By sharp contrast, even the substantially socialist European Union has cut its corporate income tax rates in recent years from an average of 38% to below 25%. Even Communist China has cut its rate below 25% as well. In Germany, the corporate tax rate has been cut to 18%. In Canada, which has boomed while Obama has been America’s President, the corporate tax rate has been slashed to 15%.
President Obama last year also permanently restored the death tax, which Congress had voted to phase out, at a 40% rate on estates over $5 million, not very much for successful small businesses and farmers. That represents a fourth layer of taxation on capital investment, counting the personal income tax, the corporate income tax, and the capital gains tax. Capital investment is the source of new jobs and wage increases for working people in our capitalist economy. But our “community organizer” President doesn’t understand that.
That anti-growth Obama tax policy, Obama’s excessive regulatory burdens and barriers, and destabilized prospects for the dollar, are the reasons why real economic growth for all of 2013, the fifth year of Obama’s Presidency, was still less than 2%. There was only any economic growth at all in 2013 because of the sequester spending cuts, the House Republican majority that was elected to stop any further Obama policy atrocities, and the fracking oil and gas revolution on private and state owned lands, which Obama has shut down on federal controlled land and offshore. Such similar, almost negligible economic growth, well below America’s historical average, has continued for all of the more than 5 years now that Obama has been President, for the same reasons.
For all the previous 10 recessions since the Great Depression, all of the GDP lost during the recession was regained within 4 quarters of the recovery on average. For Obama’s “recovery,” that took four years. Moreover, for those previous 10 recessions, all of the jobs lost during the recession were regained within 2 years on average. Today, almost 5 years after the recovery began, we still have not recovered all of the jobs lost. President Obama’s first term brought America the slowest economic growth of any Presidential term since the Great Depression.
That adds up to the worst recovery from a recession since the Great Depression. The economic policies of ten previous Presidents produced better economic recoveries from recessions than the policies of Barack Obama. Even Jimmy Carter.
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