WSJ Tax cut Opinion

WSJ Tax cut Opinion - OPINION AUGUST 2 2010 The...

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OPINION AUGUST 2, 2010 The Soak-the-Rich Catch-22 By ARTHUR LAFFER Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues. —President John F. Kennedy, Economic Report of the President, January 1963 If only more of today's leaders thought like JFK. Sadly, in the debate over whether to extend the 2001 and 2003 tax cuts, and if so whether the cuts should be extended to those people who are in the highest tax bracket, there is a false presumption that higher tax rates on the top 1% of income earners will raise tax revenues. Anyone who is familiar with the historical data available from the IRS knows full well that raising income tax rates on the top 1% of income earners will most likely reduce the direct tax receipts from the now higher taxed income—even without considering the secondary tax revenue effects, all of which will be negative. And who on Earth wants higher tax rates on anyone if it means larger deficits? Since 1978, the U.S. has cut the highest marginal earned-income tax rate to 35% from 50%, the highest capital gains tax
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This note was uploaded on 10/05/2010 for the course FIN 3000 taught by Professor Ackute during the Spring '10 term at Kennesaw.

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WSJ Tax cut Opinion - OPINION AUGUST 2 2010 The...

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