The Discerning Texan

All that is necessary for evil to triumph, is for good men to do nothing.
-- Edmund Burke
Friday, November 02, 2007

Do Tax Cuts Work? You Be the Judge...

Revenues are WAY up from the inherited Clinton recession, despite 9/11 or the Enron and other corporate scandals. Defying the howls of the Socialist Democrats in Congress, tax rates were lowered across the board by the Bush tax cuts (as were the all-important capital gains taxes). As President Bush, John F. Kennedy and Ronald Reagan knew, if you want a healthy economy you lower tax rates.

It's pretty simple how this works: if they pay lower tax rates, corporations and small business have more money to invest--in new employees, among other things. Voila! More taxpayers = more revenue. Plus individuals have more to invest, which not only leads to their own personal wealth, but also ends up putting more money into the growing economy--either through investment or just by the very act of spending it on goods and services. Which of course leads to an even better economy, more jobs, etc.

When you raise taxes, it works exactly the opposite way. Higher tax rates mean less profits for business to reinvest, which means cutbacks and fewer jobs, which means fewer taxpayers--and more Government welfare money being spent to offset the job losses. Lower revenues, less money to invest, and less money in the active economy, all because it has been sucked into the Government bottomless pit.

Ireland figured this out a few years back, and as a result drastically cut taxes across the board. And their results were similar to ours--but to the Irish they were life-changing:

Reducing taxes, therefore, pushes out the aggregate demand curve as consumers demand more goods and services with their higher disposable incomes. Supply-side tax cuts are aimed to stimulate capital formation. If successful, the cuts will shift both aggregate demand and aggregate supply, because the price level for a supply of goods will be reduced, which often leads to an increase in demand for those goods. (To learn more, read "Economics Basics".)

Tax cuts, when used properly, have stimulated the economy. Many credit President George W. Bush's tax cuts for moving the economy out of recession. Similarly, in 1964, Congress enacted an 18% cut in personal taxes to spur growth. The legislation was designed to encourage consumer spending--many believe that it succeeded admirably, as consumers delivered a textbook reaction.According to a December 2004 article in, a magazine distributed in Celtic countries, tax cuts have also shown positive results in other nations as well. Ireland's recent tax cuts are believed to have improved living standards significantly.

For years, the Irish were faced with high unemployment, budget deficits and high taxes. In 1986, Ireland faced a fiscal crisis. After reducing government spending, the government lowered taxes on both individuals and corporations. Over the next 13 years, Ireland's per capita income went from only 63% of the United Kingdom's average to besting it in 2000. Ireland now enjoys one of the highest standards of living in Europe.

According to a May 2007 article in the Herald Tribune, tax cuts in Poland, Slovakia and Hungary before their entry into the European Union have spurred economic growth in those countries.
Yet despite all this, the Democrats want to raise your taxes again--the biggest tax hike ever (and yes, that includes capital gains taxes). Their dirty little secret is: they don't care if the economy tanks, not really. Because once it does, more people become dependent on them for their survival. And thus their power over your life from cradle to grave grows, while your liberty shrivels like a raisin in the Socialist Sun. It's a zero sum game, but--as they see it--at least in this scenario the Democrats gain more power and become more entrenched than they would be if you already had all that you needed. What if you didn't need their free health care or their handouts, because you already had enough to do it yourself: when you wanted and how you wanted?

But many skeptics nevertheless are tempted to ask: what about unemployment--how did the Bush tax cuts impact that? Ah, Grasshopper, I thought you would never ask (via Gateway Pundit):

Don't expect to see this in the MSM headlines any time soon...

Despite inheriting the Clinton Recession and managing through the corporate scandals and the 9-11 attacks that crippled the US economy, the average monthly unemployment rate during the Bush years now bests the Clinton years:

Through October 2007- US Unemployment Rate History.

Today's encouraging employment news boosted the Bush Administration ahead of the previous administration.

Democrats used to preach that this was a "jobless recovery".
They were wrong.

UPDATE: Larry Kudlow is very optimistic about today's news.
Got it?

But, hey, if you want to give more of your money, and more of your liberty to the Socialists, whats a few lost jobs here and there, right? If you want them deciding when you can and cannot see a doctor, isn't that best for everyone?

Granted, this isn't rocket science. Yet somehow it remains a well kept secret, thanks to the Socialists and the media that supports them.

The good news? You don't elect the media; but you do elect your Congress, your Senators, and your President. Keep that in mind next year when the Dems start telling you how we are not paying enough to them.
DiscerningTexan, 11/02/2007 07:57:00 PM |