Tuesday, November 30, 2010

Republicans have the stronger case, but can they make it?

Thomas Sowell looks at the arguments for and against increasing tax rates on high income earners and offers a suggestion: let's take a look at the evidence.
These are not new arguments on either side. They go back more than 80 years. Over that long span of time, there have been many sharp cuts in tax rates under presidents Calvin Coolidge, John F. Kennedy, Ronald Reagan, and George W. Bush. So we don’t need to argue in a vacuum. There is a track record.

What does that record say? It says, loud and clear, that cuts in tax rates do not mean cuts in tax revenues. In all four of these administrations, of both parties, so-called “tax cuts for the rich” led to increased tax revenues — with people earning high incomes paying not only a larger sum total of tax revenues, but even a higher proportion of all tax revenues.

Most important of all, these tax-rate reductions spurred economic activity, which we definitely need today.

Sowell says Republicans (and some Democrats) have the facts on their side, but he's skeptical that they are articulate enough to make their case. I am too, and this echoes something I wrote a few days ago regarding George Bush: he was right on a lot of the issues, but I'm not sure he fully understood the underlying principles, and so he was sometimes led astray by superficial arguments.

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