Supply-Side Economics Around The World
January 11, 1996
Those media pundits who thought they had written the obituary of supply-side economics were a little premature. The evidence is too strong to deny that tax reductions do spur economic growth. And a number of once-prominent politicians who reversed course and found economic salvation in raising taxes have in recent years been retired by the voters.
High tax rates aren't just unpopular with U.S. voters. People hate them everywhere. And cutting tax rates is paying worldwide dividends in terms of economic growth.
- South Korea slashed its top tax rate from 89 percent in 1979 to 45 percent by 1993, with interest and dividend income taxed at only 21.5 percent and capital gains on real estate and securities being tax free.
- After 1979, Singapore cut its top tax rate from 55 percent to 30 percent -- it takes an annual income of $175,000 to reach the highest level -- and capital gains are not taxed at all.
- Hong Kong is a supply-sider's paradise with a top individual income tax rate of just 20 percent and a corporate rate of just 16.5 percent, with dividend income for corporations and individuals exempt from taxes.
- Hong Kong features no withholding tax on wages, no Social Security or VAT tax, no estate or gift tax and no tariffs -- yet collects tax revenues equal to 18.3 percent of gross domestic product.
U.S. tax policy writers, please take note: that's almost as much as our federal government collects in taxes.
Source: Perspective, "The Supply-Side Decade," Investor's Business Daily, January 11, 1996.
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