The deficit is big enough to take care of itself – Contrary to the Left’s propaganda claiming that tax rate cuts will increase the size of the Federal budget deficit, the opposite is true. Lower tax rates result in much more incentive for people to generate taxable income, with much higher tax revenues for our rulers to spend. The Reagan tax cuts more than doubled Federal revenues; so this has been proven in our real world. Anyone who says this isn’t true is about as trustworthy as CNN or the New York Times, and should not be relied on at all.
In fact this basic economic concept isn’t anything new. Rush Limbaugh has been receiving a lot of flack from DemonRats for daring to play an actual sound clip from 1962 of President John F. Kennedy touting the need for tax rate cuts to stimulate the economy. Current members of the JackAss Party are offended that JFK’s words are being used to support what is now a GOP concept, lower tax rates. When asked about this diversion from the ideas of JFK, his brother, Teddy tries to defend the current hypocrisy by claiming that things were different back then. The 90% top income tax rate was confiscatory; but today’s rates are just fine according to Teddy. As Stephen Moore explains, that isn’t the case. Put into perspective, our current effective tax rates, especially the two levels of tax on corporate income, are just as confiscatory as the rates were in 1962, and a reduction of those rates is just as important for the economic vitality of the country as they were when JFK advocated them 41 years ago.
The claim that the tax cuts that Bush enacted in 2001 caused the current deficit are completely bogus. They were so back end loaded that the actual amount of tax savings so far has been a tiny drop in the bucket. As I said back when they were passed, waiting for ten years for the cuts to take effect was a cruel and stupid joke. What we need to really get the economy moving is all of those tax reductions right now.
Tax Guru - Ker$tetter Letter 