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It gets tiresome, having to routinely correct the local resident socialist, but someone must do it. So…
Supply side economics was once again besmirched and slandered by the phrase “Trickle-Down Economics” in a letter to the editor last week. This slur was applied by the tax-and-spenders of the 80's (think: Tip O'Neill and his cronies) and the political Left has trotted it out, in the subsequent decades, any time someone dared to suggest that across-the-board tax cuts would not only be good for the economy, but would be a moral thing to do.
Before I go too far, I would like to note that oft repeated smears and disinformation do not a refutation make. That is, when our resident socialist says that “it has been widely proven that it (supply-side economics) simply doesn't work and isn't viable,” he is referencing decades of false claims. No proof has been offered. Quite the opposite, in fact.
In the early 1960's John F. Kennedy proposed and, with the help of congress, enacted tax rate reductions – even on the “wealthy” – and revenues to the US Treasury increased. When referring to the anticipated economic activity brought on by those tax cuts, it was Kennedy who popularized the phrase “a rising tide raises all boats”. The result he sought (and delivered) with that philosophy and those tax cuts was NOT a “rich get richer and poor get poorer” scenario. All benefited from the bottom to the top of the economy.
After the “economic malaise” of the 1970's Ronald Reagan was elected in 1980 and once again touted the benefits (to all!) of across-the-board marginal tax rate cuts. Despite the staunch resistance in the House of Representatives (led by the afore-mentioned Thomas “Tip” O'Neill and his cadre of entrenched democrats), Reagan appealed directly to the populace and, together with them, pressured congress to go along with Reagan's tax cut plan. The result? The revenue to the US Treasury at the time that Reagan took office was about $550 Billion/year. By the time he left office, it had swelled to nearly double that; at $950 Billion/year. These days, whenever a tax cut is even mentioned, the language instantly goes to “how much it's going to cost” – which is a fallacious argument; illustrated by the 80's.
Note: taxation should be for revenue generation. Not for social engineering. Not for punishment. Not to reward cronies and economic strangulation of enemies. Yet all too often, that's what the US Tax Code is used for. It is ridiculously, even criminally, complex…and needs to be simplified immediately. Americans spend billions and billions of dollars annually just trying to decipher and comply with the US Code. America literally has an entire sector of an industry that is dedicated primarily to complying with the labyrinthine tax code. That, alone, is a travesty; the beneficent effects to my accountant friends notwithstanding.
Mr. Kirk goes on to make erroneous assumptions and assertions regarding economic classes, a “living” wage, and how and for whom tax cuts are most impactful for the economy. In the interest of brevity, for this particular letter, I will refrain from addressing those at this time. Maybe next week…