David Ihde: We need real tax reform
September 27, 2017
I would like to respond to the letter written by Judy McGinnis on Tuesday, Sept. 26.
As one who has an economic degree myself, I will have to contend with some of your points. The only reason Carter had higher annual job growth was because Reagan was handed by Carter a severe recession with high inflation and even higher interest rates. Ask anyone here trying to purchase a home in the early ’80s what their interest rate was.
Therefore, his tax cuts most certainly stimulated the economy and did so despite the aforementioned high interest rates. JFK also cut taxes and boomed the economy and wrote the best speech ever advocating it.
So while tax revenue as a percent of GDP fell as it should have (or it would not have been an actual tax cut), the actual revenue to the government nearly doubled. Therefore the deficits were from over-spending not the tax cuts. He also eliminated what many regard as tax loopholes and limited passive real estate losses to $25,000 against real income from the unlimited losses enjoyed before the Tax Reform Act of 1986.
One mistake liberals make in their arguments against tax cuts is using static analysis versus dynamic analysis. They say for example that had Reagan not cut taxes the deficit would have been much lower or eliminated, forgetting that the booming economy would have never happened under the old tax rates. Especially in the high interest rate environment that was combatting an inflationary spiral left over from the ’70s.
As for your assertion on Bill Clinton's economy, that didn't boom until welfare reform and the capital gains tax cuts were in place — not because of higher taxes. He also benefited from a lower interest rate environment as well as from the booming dot.com bubble, which eventually burst leaving George Bush with a recession.
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What's fiscally irresponsible is the out of control and mostly unconstitutional spending, not letting those who pay the taxes keep more of their own money.
But this brings me to a much larger point. That is, what on earth is the second credo of the communist manifesto, namely a graduated income tax, doing in our country? We spent 30 plus years and untold billions of dollars fighting the Cold War only to find our former enemies with a flat income tax of 13 percent while we are mired down in the quicksand of the second credo of the communist manifesto.
How did this ever happen in the land of the free and the home of the brave?
We need real tax reform now that squares with the equal protection clause of the 14th Amendment to the U.S. Constitution instead of the political football of a tax code we have now. That would mean a low flat income tax with zero deductions or a full repeal of the 16th Amendment.