NCPA - National Center for Policy Analysis


December 20, 2006

Everyone who makes the claim that Bush cut taxes in the face of a war should take note: Bush didn't cut taxes, he cut tax rates, says Jack Kemp in

In fact, since Bush has been in office, tax revenues haven't gone down, they've gone up:

  • The rich haven't received tax relief at lower rates on income and investments, they are paying more in revenue to the federal (and state) government than ever before in history.
  • The top 1 percent earned 15 percent of total income and paid 35 percent of income taxes; compared to 10 years ago, "the rich" are actually paying a larger, not a smaller share of income taxes.

Even more misguided is the idea that taxes must be raised to finance war.  In fact, history has shown just the opposite to be true, says Kemp:

  • President Kennedy cut tax rates during the Vietnam War and the budget came into balance in 1965.
  • Ronald Reagan cut tax rates during the Cold War and unemployment came down, (as did inflation) while the economy more than doubled in the '80s.
  • Conversely, Richard Nixon raised taxes during the Vietnam War, and a recession followed and revenues fell.

The real answer to the challenge of funding the war, expanding our military and reducing the burden of debt -- without hurting economic growth -- is to reform and simplify the tax code while lowering the tax rate on both labor and capital, and cutting the rate of growth in government spending -- not raising rates and lowering receipts by forcing higher earners into tax shelters, offshore, or both. 

Source: Jack Kemp, "Guns, butter and tax code reform,", December 19, 2006.


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