NCPA - National Center for Policy Analysis


March 3, 2006

Between the 1960s and 1990s, we have seen sharply different opportunities in jobs, incomes, economic growth and inflation, but how did all this progress come to pass? It is because of tax reductions, says Pete du Pont, chairman of the National Center for Policy Analysis (NCPA).


  • President Kennedy's tax cuts lowered the top marginal rate to 70 percent from 91 percent, and real economic growth jumped by more than 40 percent.
  • Reagan's cuts raised real economic growth by one-third and income tax receipts went up an average of 7 percent a year.
  • President Bush's 2003 tax cuts lowered the rate to 35 percent and created the economic growth that has increased tax revenues each year -- by 5.5 percent in 2004 and 14.5 percent--the largest in 25 years -- in 2005.

So what of the future? To keep on course, four policy choices are important, says du Pont:

  • President Bush's lower tax rates on income, dividends and capital gains should be extended, because tax cuts create economic growth and individual opportunity.
  • We should move to a flat tax; estimates show that a flat tax would, in the first 10 years, generate $56 billion more in net government income tax receipts than the current tax code.
  • We must also bring the rapid growth of government to an end; in Bush's first term, domestic discretionary spending and education spending rose 7.1 percent and 139 percent, respectively.
  • Finally, we should move from static to dynamic economic calculations.

Since America's economic thinking changed, the economy has grown, recessions are less frequent, job opportunities are increasing, inflation has not been a problem and individual income tax burdens have declined, says du Pont.

Source: Pete du Pont, "The 25 Fat Years,", February 28, 2006.

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