A wise man once said that if you don’t learn from history you’re doomed to repeat it. Yet that’s exactly what the Republican House and Senate are about to do with their respective tax reform packages, which may not produce the robust growth they promise to deliver.
There is much to support in both versions: lowering the corporate tax, increasing the standard deduction and increasing the child tax credit, to name a few. But what both plans fail to do is to substantially cut marginal tax rates for the highest earners. We should fully protect private property rights, even those of our most well-off citizens. I can hear the lamentations of the left already: that’s a giveaway to the rich! Ah no, we’re not giving them anything: it was their money to begin with, because they earned it.
There are practical reasons for proposing tax cuts for high earners. High earners can put more money at risk, because they can afford to lose it. Therefore, they risk their money to make more money, in ventures that employ thousands and create opportunities for regular folks where none existed before. They create jobs.
History has proven that tax cuts for high earners expand opportunity for all. Way back in 1925, President Coolidge said, “The men and women of this country who toil are the ones who bear the cost for the government. Every dollar that we carelessly waste means that their life will be so much the more meager.” Translation: every day people worked to pay their taxes was a day they didn’t work for themselves and their families.
Coolidge cut taxes on the top earners form 73% to 24%. Everyone else’s taxes were also cut. The result? By the end of Coolidge’s term, 98% of Americans paid NO income taxes. The rich paid it all. Per capita income increased by 30%. Unemployment averaged 3.3%. Gross National Product, a measure of economic growth, grew at a faster rate than ever in US history. The roaring 20’s roared because of the Coolidge tax cuts.
Conservatives must always teach why their ideas will work, because they have worked, and other institutions (academia and the news media) will not say it.
Republicans have surrendered two important principles out of abject fear of criticism: one, no matter what your income level, your earnings are your property. Two, tax cuts for all creates prosperity, as proven by the Coolidge, Kennedy and Reagan tax cuts in the 1920’s, 1960’s and 1980’s.