Forbes Warns Against Timidity On Tax Cuts
April 5, 2001
Former GOP presidential candidate Steve Forbes is urging President George W. Bush to take a bolder stand on tax cuts -- and to increase substantially the size and scope of those he's proposing.
Forbes makes the point that previous across-the-board rate cuts always produced higher government revenues and stimulated the economy.
- Following President John F. Kennedy's steep rate reductions, federal receipts grew almost 40 percent over four years.
- After President Bill Clinton agreed in 1997 to cut the capital-gains tax rate from 28 percent to 20 percent, federal revenues resulting from that cut increased dramatically -- from $66 billion in 1996 to more than $100 billion in 1999.
- Forbes predicts that if capital-gains realizations simply keep pace with gross domestic product growth over the next 10 years, the government will collect an additional $756 billion above and beyond the projected $5.6 trillion surplus.
- In 2011 alone, government revenues would be $115 billion higher than the $652 billion being projected by the Congressional Budget Office and the Joint Tax Committee.
Forbes also has nothing kind to say about "the crazy new suggestion of instant rebates." He also warns Republicans against triggers that would halt tax cuts if surpluses disappear -- calling such a plan "an invitation to a spending binge."
The additional tax cuts he proposes include eliminating the alternative minimum tax, increasing limits on funds to Roth IRAs and 401(k)s, extending the moratorium on Internet taxes and permitting mutual-fund shareholders to avoid taxes on their funds' capital gains until they sell their shares.
Source: Steve Forbes, "On Tax Cuts, Bush Must Be Bolder," Wall Street Journal, April 5, 2001.
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