Speed Up Tax Cuts
February 5, 2002
The bulk of President Bush's tax cut won't take effect until at least 2004 -- and it is scheduled to disappear in 2011. Many economists contend that timetable needs to be accelerated and the cuts made permanent to have the economic stimulus and revenue-producing effect needed now.
In his State of the Union address, the President called on Congress to work to this end.
There is abundant historical evidence of the salutary effect of rate cuts:
- In the 1960s, President Kennedy cut the top tax rate to 70 percent from 91 percent.
- Then between 1961 and 1968, the economy expanded by more than 42 percent and tax revenues rose by more than one-third.
- In the 1980s, the top marginal rate was cut to 28 percent from 70 percent.
- Once the cuts were fully phased in, revenues from personal income taxes increased 28 percent, adjusted for inflation, by 1989.
And as for the claim that tax cuts are a break for the rich, experts note wealthy families wound up paying a greater share of taxes.
Even the Organization for Economic Cooperation and Development has noted that the U.S. has relatively high rates for income and estate taxes. It also suggests that tax revenues from high-income taxpayers might rise if their tax rates fell.
Source: Daniel Mitchell (Heritage Foundation), "Cutting Taxes Faster Would Help Everyone," New York Times, February 5, 2002.
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