Like most everything related to government policy on the economy, tax cuts are not a religious issue. Sometimes we need them. Sometimes we don’t. The question should turn on sound economics and empirical evidence. The current GOP leadership is either incapable of making fine distinctions, or they just say things they know to be false. Paul Waldman:
Republicans are remarkably consistent in how they talk about the economy, no matter what actually occurs. For example: In 1993 they said, loudly and clearly, that if Bill Clinton’s budget with its top-rate income tax increase passed, the result would be a “job-killing recession.” It did pass, and 23 million jobs were created over the next eight years. In 2001, they said, loudly and clearly, that if we passed George W. Bush’s tax cuts rolling back those increases and cutting other taxes further, the economy would explode with job-creating growth. Over the following eight years, only 3 million jobs were created. The relative success of Clinton and Bush didn’t change the arguments they make about taxes one iota.
To my mind, Democrats don’t shove this in their faces nearly often enough. They could win almost any debate with their opponents by saying, “We had two tests of my Republican friend’s economic theories in the last two decades. They were called the Clinton administration and the Bush administration. And they both proved him wrong.”
Touché. That’s not to say that there have been no periods in history when poor tax strategies have dampened growth. It’s often argued that Reagan’s tax cuts in 1983 — which brought down a top marginal tax rate of almost 70% — were economically beneficial. But that’s not our world today. Here’s Housel:
It’s worth noting that [Reagan’s] 1983 . . . lowered top rates from 69.13% to 50%. . . . Top marginal tax rates under all but one year of Ronald Regan’s presidency were over 50%. He’s remembered as the high priest of low taxes. Obama wants to revert taxes to 39.6%, where they were in the ’90s. He’s frequently referred to as a socialist.
Those who don’t remember this are bound to suffer from thinking that when something goes up, it’s high, and when something goes down, it’s low. That’s crazy. It’s the absolute value of taxation that matters, and today’s top marginal tax rates are extremely low on a historical basis.