The Lessons On Tax Cuts That Lawmakers Need to Learn

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Our liberty and livelihoods are under increasing threat, as President Biden and his allies push for a terrifying expansion of government and taxes.

Yet, Senate Minority Leader Mitch McConnell (R-KY), has been about as resistant to the Democrat-fashioned “Infrastructure” bill as Winnie The Pooh is to honey. And, though House Minority Leader Kevin McCarthy (R-CA) has spoken against the “Infrastructure” bill and opposed the Biden-designed 2022 spending bill (which, combined, would total more than $5 trillion), it’s important to stress to both men that they are neglecting something very important in US history.

This is the fight for lower taxes.

The historical data and moral lessons go deep, from the colonial protests against British Taxation, to massive protests in response to Abraham Lincoln’s unconstitutional imposition of the first income tax in 1861.

As Llewellyn Rockwell notes:

The first income tax was levied by Abe Lincoln to fund the invasion of the South. When the tax was later found unconstitutional, Congress eventually passed the 16th amendment. Most people didn't know where it would lead. Now almost everyone works nearly five months out of the year for the feds.

Indeed, from 1913 to today, generations of Americans have been targeted not only by the government, but by hordes of collectivists who have demonized them as acquisitive, exploitative, and evil, simply for attempting to keep the fruits of their labor.

But there have been bright moments, moments in the Twentieth Century when the spirit of American respect for one’s neighbor has won out, and taxes were lowered.

As Daniel Mitchell writes for The Heritage Foundation, the aggregate economic benefits of tax cuts could be seen as early as the 1920s, when tax rates were cut from an upper threshold of 70 percent to 25 percent. Cash that “the wealthy” formerly hid from the government began rolling in, and, of course, more people were able to keep their own money, allowing them to invest and allowing more to grow wealthy. The point about tax cuts is NOT to bring in more money to the government through the expansion of widespread economic betterment, the point is allowing more opportunities for widespread economic betterment, but, as Mitchell notes:

According to then-Treasury Secretary Andrew Mellon:

‘The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.’

The point about tax cuts is not concerned with the parasitic government, but expansion of the economic pie via allowing the citizens to be the bakers, and the big lesson was about to be taught.

As Grove City College professor and author Paul Kengor explains for the Independent Institute, the lesson arrived with President John F. Kennedy. Discussing the book, “JFK and The Reagan Revolution,” by Lawrence Kudlow and Brian Domitrovic, Kengor observes:

Kudlow and Domitrovic begin by debunking the myth that the pre-Kennedy years—that is, the Eisenhower years—were a halcyon period of booming growth amid massively high upper-income tax rates, specifically a 91 percent top rate. It’s amusing to watch liberals who once trashed the Eisenhower years now hoist them up as idyllic because America was (allegedly) blessed with the modern progressive dream of economic growth amid fabulously high tax rates that soaked the rich. Major growth and major wealth redistribution: the progressive dream.

Indeed, the economy repeatedly went into busts.

(T)he prosperity of the 1950s was constantly interrupted and was shared by a shrinking segment of the citizenry. From 1949 through 1960, the economy went into recession four times—a dubious achievement that had happened only twice since 1929.

But in August of 1962, Kennedy gave a speech, emphasizing the importance of lowering income taxes:

Kennedy argued: ‘Every dollar released from taxation that is spent or invested will help create a new job and a new salary. And these new jobs and new salaries can create other jobs and other salaries and more customers and more growth for an expanding American economy.’ 

Economics 101. But it’s avoided by politicians with a penchant for directing other people’s lives and playing favorites in order to aggrandize power unto themselves and their collectivist ilk. Stripped of his name, Kennedy’s words today would be attacked by virtually any member of the Democrat wing in DC.

Adds Kengor:

Kennedy asked Congress for a reduction of the top rate from the current 91 percent to 65 percent. He requested that the personal income tax rate be cut by a maximum of 30 percent across the board. The bottom rate would be reduced from 20 to 14 percent, and each of the whopping twenty-two tax rates in between would be reduced on average by about 22 percent. Kennedy and his team sent their proposal to Congress on January 23, 1963.

The man would not live to see the passage of the cuts, or their incredible economic benefits. But, even on the day of his assassination, JFK reiterated his call for the feds to lower the burden on Americans, saying in Dallas on November 22, 1963:

(W)e need a tax cut . . . as an assurance of future growth and insurance against an early recession.”

And, perhaps because of public response to the horrific murder of Kennedy, many on the left, including the usually pernicious Lyndon Johnson, supported JFK’s plan:

Fortunately, the new president, old Senate wheeler and dealer Lyndon Johnson, picked up the challenge of strong-arming Congress to pass the bill. Not that Congress needed much persuasion. The votes in the Senate and House were overwhelming in favor of Kennedy’s tax cuts, with the Senate voting first on February 7, 1964 (77–21). Even liberals Hubert Humphrey, Eugene McCarthy, Paul Douglas, and, yes, a young Ted Kennedy voted for the tax cut.

What happened?

(The top rate) was reduced from 91 to 70 percent. Most of the rate reductions came in 1964, with the remainder being implemented in 1965. The economy took off and steadily so—new businesses, new jobs. After 1964, growth exceeded 5 percent all the way into the Nixon presidency in 1969. From 1961 through 1969, the economy enjoyed a record 106 months of uninterrupted growth.

Sadly, as Johnson expanded the welfare state and Nixon expanded the regulatory state, as Ford did little to nothing to reverse the trends, and as Jimmy Carter increased the tax burden on Americans, the bakers of the economic pie had fewer income resources with which to bake. Coupled with the price-spiking effects of a continually inflated money supply to fund the bigger and bigger federal leviathan, the US economy tanked.

Yet Ronald Reagan, a man whom many leftists do not know was well versed in free market economic theory and economic history, remembered Kennedy’s actions, and set about changing the tax landscape for millions of Americans.

With the Reagan cuts, real economic growth in 1983 was 5.3 percent, followed by five consecutive quarters of growth higher than 7 percent, a terrific feat and the only such occurrence in the history of the statistic. The Reagan recovery was one of the greatest in American history.

There are many factors to consider when looking at economic history, but the consistent truism of it runs hand-in-hand with the moral lesson:

A man’s earnings are his own. The valuation of one’s time, money, and life – all are subjective and part of our God-Given rights to control.

As Kengor notes:

In his State of the Union Address in 1986, Reagan would point to Kennedy: I believe our tax rate cuts for the people have done more to spur a spirit of risk-taking and help America’s economy break free than any program since John Kennedy’s tax cut almost a quarter-century ago.’

When it comes to tax cuts, Reagan was spot-on.

We would like to implore Republican leaders to remember these lessons, and act on them – for this and future generations.

Related: Biden Claims Tax Hike Plan Is Tax CUT Plan, Wants Your Bank Info | MRCTV

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