The Pathological Stupidity Of Obama’s ‘Fairness’ Meme Of Taxing The Rich

We need to balance our insane budget deficit, Democrats say.  And it’s time the rich paid their fair share.

All the top 10% of earners paid is 73 percent of the income taxes collected by the federal government.  That’s nothing.  It’s those poor poor who suffer the most.  The bottom 50% have to pay a whole bunch of nothing.  It’s just brutal for them every April.  They want to write a check to the government, but only the rich get to do stuff like that.  And the bottom 40% are so screwed by our federal income tax system that they actually are forced to accept free money in addition to paying a whole bunch of nothing.  Unless the Associated Press is lying about it.

Nothing makes me more annoyed than the phrase “give the rich tax cuts.”  Because it presumes that the government owns us and graciously allows us to keep some of what we earn.  The way liberals understand things, they own all the means of production.  They own my labor and whatever I earn from my labor.  And I am lucky if the commissars allow me to keep enough to feed myself.  It derives from a tenant of Marxism: “From each according to his ability, to each according to his need.”  At the core is central planning; government stands above us, it stands above God (which is why consistent Marxists deny God exists and religion is merely an opiate of the masses), and government should redistribute everything according to its divine power.

That is the intrinsic logic of their view that allowing the rich or anyone else to keep more of their own money is considered a cost to the government.  But it ISN’T a cost to the government to allow me to keep more of my own money; anymore than it is a cost to me to allow my next door neighbor to keep more of his own tools.

Obama gave an address in which he paid lip service to reducing spending – even though his budget that he released only TWO MONTHS AGO didn’t reduce any spending at all – and in fact stated that it would be dangerous to do so.  Obama has no plans to cut spending; in fact, the deficit in just the first six months of this year shot up another 15.7%.  Obama is going to do what he’s been doing since he started running for president; he’s going to offer meaningless rhetorical platitudes about cutting spending and reducing costs, while demonizing the rich and demanding that the ONLY people who pay REALLY START TO PAY.

Obama is going to talk about “fairness.”

The ‘fairness’ meme
April 12, 2011 – 4:47 am – by Roger Kimball

We don’t know exactly what Barack Obama is going to say when he fires up his teleprompters at George Washington University tomorrow. The color, we do know, however: it’s red, as in “red ink,” what Mitch Daniels at his speech at CPAC earlier this year called “the new red menace.” (I like to think that the invocation of the old “red menace,” the Communist, socialist one, was deliberate: it is, I would argue, apt.)

The substance of the speech, as ABC notes, is “closely held.” Everybody thinks that there will be at least pro forma acknowledgement that spending on such programs as Medicare and Social Security needs to be reined in. But the big O will also return to one of his favorite themes, a by-word from his 2008 campaign: “increased taxes on the wealthy” (that’s according to “White House officials”).

Here’s my bet: the operative word in Obama’s speech tomorrow night, the mantra that will be repeated endlessly not only by O but also by the left-wing commentariat, is “fairness.” You remember his campaign shtick: the Saddleback Church event, for example, when Rick Warren asked candidates John McCain and B.O. about taxes. “Define rich,” he asked. McCain tossed out an income of $5 million, which elicited derision. But the gravamen of his response came in the elaboration: “I don’t want to take any money from the rich. I want everybody to get rich.”

How different was B.O.’s response: What he was looking for, he said, was “a sense of balance, and fairness in our tax code. It is time for folks like me who make more than $250,000 to pay our fair share.”

“Our fair share.” That, as I noted at the time, is B.O.’s refrain. “[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.” It’s a small step from the invocation of “our fair share” to Obama’s call for a tax on “the windfall profits of oil companies,” a tax increase on capitals gains, elimination of the tax on Social Security tax, etc., etc.

The crucial point here is that what Obama is interested in is not increasing revenue but in promulgating redistributionist policies that make it harder for people to prosper economically. William McGurn, writing in The Wall Street Journal back then, recalled Obama’s response to ABC’s Charlie Gibson when Gibson observed that raising taxes led to decreased revenues: “Well, Charlie,” Obama replied, “what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”

“For purposes of fairness”: that means, “for purposes of economic egalitarianism.”

McGurn observed:

[I]t doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.

Now there are good reasons Mr. Obama is not likely to pursue the revenue side of the fairness question. As this newspaper noted in a recent editorial, the latest data from the Internal Revenue Service does not show to Mr. Obama’s advantage. As we come to the end of the Bush administration, the top 1% of American taxpayers already pay 40% of all income taxes — the highest level in 40 years. The top 10% of income earners pay 71% of the taxes.

The bottom line is that when Obama invokes “fairness,” he wants us to feel guilty about economic success. This is the secret of his appeal to the socialistically inclined.

It worked in 2008. Let’s see how it goes down tomorrow. Over the last two years, Barack Obama has presided over an economic Armageddon. Everyone knows about that $14 trillion that is the federal debt. Few people, I suspect, really appreciate what that unimaginable figure represents. And the kicker is, $14 trillion is only a tithe of the trouble. As Kevin Williamson and others have pointed out, the country’s real debt, when you facotr in state indebtedness and unfunded so-called “entitlement” liabilities, is closer to $130 trillion. That horror-movie figure is just too awful to contemplate, so I will draw a veil.

[…]

For the record, I wrote an article entitled, “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues,” in which I documented that every single time the United States has reduced the income tax rate, federal revenues have gone up.  I go back to Warren Harding to document that.  I include John F. Kennedy, Ronald Reagan, and George Bush – who increased federal revenues by lowering tax rates.

But this recurring documented fact of U.S. history is tantamount to rocket science to liberals.  Because they adhere to the entirely unrealistic premise that if I were to double your taxes, I would collect double the revenue, because people wouldn’t react to the tax increase by altering their behavior.

Recent developments give me a crystal clear example of why liberals couldn’t be more wrong:

Gas Price Rise, Americans Drive Less
By Rachel Smith
Posted: Apr 12, 2011 10:30 a.m.

Americans are taking rising gas prices seriously. They’re already driving less, “reversing what had been a steady increase in demand for fuel,” the Associated Press writes. “For five weeks in a row, they have bought less gas than they did a year ago.”

The average price of gas is an obvious indicator of why national fuel consumption is dropping. At the end of March, AAA reported that gas reached an average of $3.60 nationally. Today, AAA says the national average is $3.79 for regular grade, a 29 cent jump in about two weeks. Business Week reports that many analysts forecast that these numbers will worsen, and expect that consumers could pay as much as $5 a gallon this year due to political unrest in North Africa and the Middle East, which supply much of the United States’ oil. The $5 per gallon speculation has been floating around the industry for some time, but last year, CNN stated that former president of Shell Oil, John Hofmeister predicted that Americans could pay $5 a gallon by 2012. Analysts have bumped that date up.

“Drivers are already reacting to the change,” writes Kicking Tires. “In the first week of April, consumption was down 3.6%, or 2.4 million gallons of gasoline,” based on data from MasterCard Spending Pulse.

One of the best ways to combat rising gas prices is to drive less, but there are other simple things you can do. […]

Even uneducated, ignorant and frankly stupid people understand this incredibly basic concept: cost goes up, activity goes down.  And yet you have liberals with PhDs staffing agencies such as the Congressional Budget Office utterly fail to understand that if they make taxes go up, they will end up with reactions that will invariably produce less revenue for the government.

If even high-school dropouts understand that if the price of gasoline goes up, they need to drive less, how is it that brilliant businessmen won’t realize that if their tax rates go up, they need to protect their money?

Here’s another analogy that might be spot on the money.  Suppose your going to work and a mugger jumps you and takes all your money.  As he’s walking off, counting your (well, his now) cash, he says, “I hope you’ve got as much dough tomorrow, because I’m going to mug you again.”  Now, if you’re smart, you won’t be happening by that way at all the next day.  But if you’ve absolutely got to go that way to get to work, will you have as much money that next day?  Not if you’ve got a single functioning brain cell.  On my analogy, if you figure out some other way to get to work, that’s tax avoidance.  If you stash your cash somewhere so you don’t have it for the robber to take, that’s tax sheltering.  And if you’re too stupid to understand that this is what people do when their taxes go up, that’s liberalism.

The more taxes increase, the more activities that were previously not worth doing – such as sheltering assets, moving assets overseas, investing in collectibles, purchasing tax-exempt investment vehicles, or just dodging taxes – become worth doing.

And so,what happens every single time happens yet again.  Raise taxes expecting more revenue, get less revenue, and hurt the economy in the process by penalizing productivity and investment risk and thereby restricting growth.  And when you encourage growth by reducing the tax burden and allowing people to keep what they earn, lo and behold, cetaris parabis, there is a surge in activity, an increase in economic growth and a corresponding increase in federal tax revenue.

I say “cetaris parabis” because if you throw in a socialist Fannie Mae and Freddie Mac that undermine something as vital as our housing mortgage market by imposing morally and fiscally insane policies until the system comes crashing down, such as what occurred leading up the crash in 2008, the best tax rates in the world can’t save the system.

Here are just a few articles I wrote on that subject, in order of date written with the earliest listed first:

Biden: ‘We Misread The Economy, And It’s All Republicans’ Fault

AEI Article: How Fannie And Freddie Blew Up The Economy

Barney Frank And Democrat Party Most Responsible For 2008 Economic Collapse

More Proof Democrats Destroyed The Economy In 2008: The Ongoing Fannie Mae/Freddie Mac Disaster

We need to have intelligent economic policies.  If we don’t have such policies, we’re going to struggle regardless of our tax rates.

Quickly, another liberal policy that will not even possibly work is the Federal Reserve QE2 (that’s the second shot at quantitative easing) that artificially reduces interest rates by artificially increasing the money supply in order to increase lending.

Here’s the problem with that.  Short term, it might seem to work.  The stock market looks at the apparent backstopping of our economy and follows the leader (Uncle Sam) up until the ship starts to sink.  After which they will sell, sell, sell.  But the ship ALWAYS sinks.  Why?  Because you have a lot more dollars chasing after the same supply of finite goods and services (if anything, in the last few years, we have a LOWER supply of finite goods and services).  So what happens?  More dollars chasing less stuff.  That’s inflation.  It will INVARIABLY require more devalued dollars to buy the same things.  The more you inflate the money supply, the worse that inflation gets.  And we have massively increased our money supply.

Let me go back to what I wrote going on a year ago now:

An increase in the money supply is rather like an overdose of drugs.  And in this case the effect of the overdose will be hyperinflation.  Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate.  Why?  Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued.  There’s simply no way it can’t be.  If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire.  The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems.  If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency.  And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins.  Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.

And let me point out that we’re looking at huge inflation now – even as Obama declares victory over the recession – in insanely rising gas prices, food prices, clothes prices, all prices:

Hope ‘n Change Coming To Fruition: Cost Of EVERYTHING About To Go Up

Instability, Food Riots And A Heaping Dose Of ‘I Told You So’

Just like I said would happen.  And just like the long list of economists said would happen when they begged Obama not to do the $3.27 trillion stimulus.

This phenomenon is going on all over the world because most of the world is tied to the U.S. dollar – the currency that Obama has been poisoning hoping for short-term political gains.

And, again, a temporary extension of the Bush tax cuts (which doesn’t help businesses and individuals who are desperately searching for consistency so they can predict their costs) is not going to help us out of this kind of moral and fiscal insanity.

But what we are going to see is Obama now demagoguing all the massive economic failure that his own policies are responsible for creating in the first place to demand that the rich “pay their fair share.”

Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues

We keep seeing the same liberal argument being played over and over again.  As the mainstream media seek to make their case to the American people that the Bush tax cuts should expire, one of the primary strategies being employed is to claim that Republicans are refusing to “pay for” their extension of the tax cuts.  And that therefore the Republicans will hike the deficit.  The problem is that it’s a false premise, based on a static conception of human behavior that refuses to take into account the fact that people’s behavior changes depending upon how much of their money they are allowed to keep, and how much of their money is seized from them in taxation.

As bizarre as it might seem, it is seen as perverse these days to suggest that allowing someone to keep more of the money he or she invests would stimulate people to take more risks by investing in businesses and products, and that such increased investment in business and products would in turn stimulate more economic growth.  Common sense has become akin to rocket science these days.

Then again, liberals aren’t doing much for rocket science, either.

Let’s take a look at the current facts, and then examine the history of our greatest tax-cutting presidents.

The Falsehood That Democrats Are ‘Cutting’ Taxes

Democrats say they are cutting taxes on “95% of Americans, but argue that giving the same tax cut benefits to the remaining 5% would hike the deficit and be fiscally irresponsible.

Well, for one thing, the Democrats are flat-out lying when they say they are cutting taxes for 95% of Americans.  That can’t possibly be true, because as a matter of simple fact a whopping 47% of American households pay no federal income taxes whatsoever.

WASHINGTON (AP) — Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it’s simply somebody else’s problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization. […]

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

What Democrats are doing – deceitful liars that they are – is giving Americans “tax credits” and calling them “tax cuts.”

A  tax cut is a reduction in the percentage or amount of taxes that is being imposed on a citizen.  The government is cutting the amount it had been collecting from taxpayers.  A government cannot “cut” a citizen’s taxes unless that citizen had been paying taxes in the first place.

A tax credit is when you give someone money that has been collected from another taxpayer.  It is redistribution of wealth.  It is what Karl Marx described as “from each according to his ability, to each according to his need.”  Do you notice that “to” in the middle?  It means, “transferring the wealth from one government-penalized group of people TO another government-privileged group of people.”  It is what Obama described as “spreading the wealth around.”

What Obama and the Democrats in Congress propose is NOT a “tax cut.”  And it is nothing but a lie to call it that.  And every single journalist who has suggested that it is a tax cut is as much of a liar as the Democrats are.

That’s the first point.  Democrats are advancing a central tenet of Marxism and deceitfully and even demagogically relabeling it as “capitalism.”  And the media helps them get away with it.

The Falsehood That Cutting Taxes For the Rich – But NOT The Other Classes – Contributes To the Deficit

Next comes the idea Democrats argue that tax cuts for the rich contribute to the deficit.

Let’s say for the sake of argument (just for the moment; I’ll prove it’s wrong below) that tax cuts for the rich raise the deficit.  Let me ask you one question: how then do tax cuts for the rest of us not ALSO raise the deficit???

Why wouldn’t raising taxes on the middle class and the poor not correspondingly lower the deficit?  So why aren’t Democrats going after them?

Are Democrats too stupid to realize that there just aren’t enough rich people to pay off our deficit, especially when this president and this Congress have raised said deficit tenfold over the last Republican-passed budget deficit?  The last budget produced by congressional Republicans was in 2007.  That year, the deficit was approximately $160 billion; now under Obama, Nancy Pelosi and Harry Reid it is $1.6 TRILLION a year as far as the eye can see.

Wouldn’t ANY tax cuts raise the deficit?  And shouldn’t we therefore tax the bejeezus out of EVERYBODY to lower the deficit?  Wouldn’t every single dollar collected reduce the deficit correspondingly?

Let me put it concretely: say I took a $100 bill out of the wallet of a millionaire.  And then say I took a $100 bill out of the wallet of a poor person.  If I took both bills to a Democrat, would he or she be able to tell the difference?  Would he say, “Ah, THIS bill will lower the deficit because it comes from a rich person; but THIS one clearly won’t because it clearly came from a poor person.”

Update, Sep. 10: A study by the Joint Tax Committee, using the same static methodology that I refer to in my opening paragraph, calculate that the government will lose $700 billion in revenue if the tax cuts for the top income brackets are extended.  And that sounds bad.  But they also conclude that the Bush tax cuts on the middle class will cost the Treasury $3 TRILLION over the same period.  If we can’t afford $700 billion, then how on earth can we afford $3 trillion?  And then you’ve got to ask how much the Treasury is losing by not taxing the poor first into the poorhouse, and then into the street?  And how much more revenue could we collect if we then imposed a “street” tax? [end update].

Hopefully you get the point: if tax cuts for the rich are bad because they increase the deficit, then they are equally bad for everyone else for the same exact reason.  And so we should either tax the hell out of everyone, or cut taxes for everyone.  And a consistent Democrat opposed to “deficit-hiking tax cuts for the rich” should be for raising YOUR taxes as much as possible.

Republicans don’t fall into this fundamental contradiction (see below), because they don’t believe that tax cuts create deficits.  Democrats do.  Which means they are perfectly content with shockingly supermassive deficits – as long as its 95% of Americans who are creating those deficits, rather than 100%.

Joe Biden said it was a patriotic duty to pay higher taxes.  And yet Democrats are trying to make 95% of Americans unpatriotic traitors who don’t care about their country?

Now, Democrats will at this point repudiate logic and punt to the issue of “fairness.”  But “fairness” is a very subjective thing, when one group of people decide it’s “fair” for another group of people to hand over their money while the first group pays nothing.  Even George Bernard Shaw – a socialist, mind you – understood this.  He pointed out the fact that “A government that robs Peter to pay Paul can always depend on the support of Paul.”

Which is to say it’s NOT fair at all.  Paul may think it’s fair, but poor Peter gets screwed year after year.

And it is a fundamental act of hypocrisy – not to mention advancing yet ANOTHER central tenet of Marxist class warfare – to claim to oppose tax cuts for the rich in the name of the deficit, but not to oppose tax cuts for everyone else.

And for the record, I despise both hypocrisy AND central tenets of Marxism.  Which is why I despise the Democrat Party, which is both hypocritical and basically Marxist.

[Update, September 20] Brit Hume demolished the Obama-Democrat argument regarding the Bush tax cuts being a “cost” to the government, saying:

“But the very language used in discussing these issues tells you something as well. In Washington, letting people keep more of their own money is considered a cost. As if all the money really belongs to the government in the first place in which what you get to keep is an expenditure.”

And, again, that mindset about government control and in fact government ownership over people’s wealth represents a profoundly Marxist view of the world. [End update].

For what it’s worth, Democrats will only maintain the massive contradiction of “tax cuts for the rich raising the deficit” for so long.  Obama already admitted he was willing to go back on his promise to raise taxes on the middle class.  And his people are already looking to tee off on middle class tax hikes.  In addition, if you have any private retirement funds, they may well be coming after you soon.

The Falsehood That Tax Cuts Increase The Deficit

Now let’s take a look at the utterly fallacious view that tax cuts in general create higher deficits.

Let’s take a trip back in time, starting with the 1920s.  From Burton Folsom’s book, New Deal or Raw Deal?:

In 1921, President Harding asked the sixty-five-year-old [Andrew] Mellon to be secretary of the treasury; the national debt [resulting from WWI] had surpassed $20 billion and unemployment had reached 11.7 percent, one of the highest rates in U.S. history.  Harding invited Mellon to tinker with tax rates to encourage investment without incurring more debt. Mellon studied the problem carefully; his solution was what is today called “supply side economics,” the idea of cutting taxes to stimulate investment.  High income tax rates, Mellon argued, “inevitably put pressure upon the taxpayer to withdraw this capital from productive business and invest it in tax-exempt securities. . . . 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” (page 128).

Mellon wrote, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower taxes.”  And he compared the government setting tax rates on incomes to a businessman setting prices on products: “If a price is fixed too high, sales drop off and with them profits.”

And what happened?

“As secretary of the treasury, Mellon promoted, and Harding and Coolidge backed, a plan that eventually cut taxes on large incomes from 73 to 24 percent and on smaller incomes from 4 to 1/2 of 1 percent.  These tax cuts helped produce an outpouring of economic development – from air conditioning to refrigerators to zippers, Scotch tape to radios and talking movies.  Investors took more risks when they were allowed to keep more of their gains.  President Coolidge, during his six years in office, averaged only 3.3 percent unemployment and 1 percent inflation – the lowest misery index of any president in the twentieth century.

Furthermore, Mellon was also vindicated in his astonishing predictions that cutting taxes across the board would generate more revenue.  In the early 1920s, when the highest tax rate was 73 percent, the total income tax revenue to the U.S. government was a little over $700 million.  In 1928 and 1929, when the top tax rate was slashed to 25 and 24 percent, the total revenue topped the $1 billion mark.  Also remarkable, as Table 3 indicates, is that the burden of paying these taxes fell increasingly upon the wealthy” (page 129-130).

Now, that is incredible upon its face, but it becomes even more incredible when contrasted with FDR’s antibusiness and confiscatory tax policies, which both dramatically shrunk in terms of actual income tax revenues (from $1.096 billion in 1929 to $527 million in 1935), and dramatically shifted the tax burden to the backs of the poor by imposing huge new excise taxes (from $540 million in 1929 to $1.364 billion in 1935).  See Table 1 on page 125 of New Deal or Raw Deal for that information.

FDR both collected far less taxes from the rich, while imposing a far more onerous tax burden upon the poor.

It is simply a matter of empirical fact that tax cuts create increased revenue, and that those [Democrats] who have refused to pay attention to that fact have ended up reducing government revenues even as they increased the burdens on the poorest whom they falsely claim to help.

Let’s move on to John F. Kennedy, one of the most popular Democrat presidents ever.  Few realize that he was also a supply-side tax cutter.

Kennedy said:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

– John F. Kennedy, Nov. 20, 1962, president’s news conference

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“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”

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“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”

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“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”

– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.

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“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

Which is to say that modern Democrats are essentially calling one of their greatest presidents a liar when they demonize tax cuts as a means of increasing government revenues.

So let’s move on to Ronald Reagan.  Reagan had two major tax cutting policies implemented: the Economic Recovery Tax Act (ERTA) of 1981, which was retroactive to 1981, and the Tax Reform Act of 1986.

Did Reagan’s tax cuts decrease federal revenues?  Hardly:

We find that 8 of the following 10 years there was a surplus of revenue from 1980, prior to the Reagan tax cuts.  And, following the Tax Reform Act of 1986, there was a MASSIVE INCREASE of revenue.

So Reagan’s tax cuts increased revenue.  But who paid the increased tax revenue?  The poor?  Opponents of the Reagan tax cuts argued that his policy was a giveaway to the rich (ever heard that one before?) because their tax payments would fall.  But that was exactly wrong.  In reality:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So Ronald Reagan a) collected more total revenue, b) collected more revenue from the rich, while c) reducing revenue collected by the bottom half of taxpayers, and d) generated an economic powerhouse that lasted – with only minor hiccups – for nearly three decades.  Pretty good achievement considering that his predecessor was forced to describe his own economy as a “malaise,” suffering due to a “crisis of confidence.” Pretty good considering that President Jimmy Carter responded to a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

Reagan whipped inflation.  Just as he whipped that malaise and that crisis of confidence.

This might explain why a Gallup poll showed that Ronald Reagan is regarded as our greatest president, while fellow tax-cutting great John F. Kennedy is tied for second with Abraham Lincoln.  Because, in proving Democrat policies are completely wrongheaded, he helped people.  Including poorer people who benefited from the strong economy he built with his tax policies.

Let’s move on to George Bush and the infamous (to Democrats) Bush tax cuts.  And let me quote none other than the New York Times:

Sharp Rise in Tax Revenue to Pare U.S. Deficit
By EDMUND L. ANDREWS
Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.”

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.

[Update, September 20: The above NY Times link was scrubbed; the same article, edited differently, appears here.]

Note the newspaper’s use of liberals favorite adjective: “unexpected.” They never expect Republican and conservative polices to work, but they always do if they’re given the chance.  They never expect Democrat and liberal policies to fail, but they always seem to fail every single time they’re tried.

For the record, President George Bush’s 2003 tax cuts:

raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.

Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.

Budget deficits are not merely a matter of tax policy; it is a matter of tax policy AND spending policy.  Imagine you have a minimum wage job, but live within your means.  Then you get a job that pays a million dollars a year.  And you go a little nuts, buy a mansion, a yacht, a fancy car, and other assorted big ticket items such that you go into debt.  Are you really so asinine as to argue that you made more money when you earned minimum wage?  But that’s literally the Democrats’ argument when they criticize Reagan (who defeated the Soviet Union and won the Cold War in the aftermath of a recession he inherited from President Carter) and George Bush (who won the Iraq War after suffering the greatest attack on US soil in the midst of a recession he inherited from President Clinton).

As a result of the Clinton-era Dot-com bubble bursting, the Nasdaq lost a whopping 78% of its value, and $6 trillion dollars of wealth was simply vaporized.  We don’t tend to remember how bad that economic disaster was, because the 9/11 attack was such a huge experience, and because instead of endlessly blaming his predecessor, George Bush simply took responsibility for the economy, cut taxes, and fixed the problem.  The result, besides the above tax revenue gains, was an incredible and unprecedented 52 consecutive months of job growth.

Update September 12: Did somebody say something about “jobs”?  Another fact to recognize is the horrendous damage that will be done to small businesses and the jobs they create if the tax cuts for the “rich” aren’t continued.  As found in the Wall Street Journal, “According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.” Further, the Tax Policy Center found that basically a third of taxpayers who are expected to be in the top tax bracket in 2011 generate more than half their income from a business ownership.  And while Democrats love to point out that their tax hikes on the so-called rich only impact 3% of small businesses, the National Federation of Independent Business reports that that three percent employs about 25 percent of the nation’s total workforce.  “Small businesses that employ 20 to 250 workers are the most likely to be hit by an increase in the top two tax rates, according to NFIB research. Businesses of this size employ more than 25 percent of the U.S. workforce.”  So if you want jobs and an economic recovery, you simply don’t pile more punishing taxes on those “rich” people.  Especially during a recession [End update].

We’re not arguing theories here; we’re talking about the actual, empirical numbers, literally dollars and cents, which confirms Andrew Mellon’s thesis, and Warren Harding’s and Calvin Coolidge’s, John F. Kennedy’s, Ronald Reagan’s, and George W. Bush’s, economic policies.

Harding and Coolidge, Reagan and Bush, with Democrat JFK right smack in the middle: great tax cutters all.

The notion that small- and limited-government conservatives who want ALL Americans to pay less to a freedom-encroaching government are somehow “beholden to the rich” for doing so is just a lie.  And a Marxist-based lie at that.

[Update, 12/15/10]: Check out these numbers as to how the Reagan tax cuts INCREASED the taxes paid by the wealthy, and REDUCED the taxes paid by the middle class and the bottom 50% of tax payers:

Income tax burdens (from the Joint Economic Committee for the US Congress report, 1996):
1981: top 1% of earners paid 17.6% of all personal income taxes
1988: top 1% of earners paid 27.5% of all personal income taxes (+ 10%).

1981: top 10% of earners paid 48% of all personal income taxes
1988: top 10% of earners paid 57.2% of all personal income taxes (+ 9%).

So rich clearly paid MORE of the tax burden when their tax rates were LOWERED.

For the middle class:
1981: middle class paid 57.5% of all personal income taxes
1988: middle class paid 48.7% of all personal income taxes (- 9%).

The middle class’ tax burden went DOWN by 9%.  They paid almost 10% LESS than what they had been paying before the Reagan cuts.

For the bottom 50%:
1981: bottom 50% paid 7.5% of all personal income taxes
1988: bottom 50% paid 5.7% of all personal income taxes (- 2%).

So the Joint Economic Economic Committee concludes that if you lower the tax rates on the rich, the rich wind up paying MORE of the tax burden and the poor end up paying LESS.  When you enact confiscatory taxation policies, the people who can afford it invariably end up protecting their money.  They do everything they can to NOT pay taxes because they are getting screwed.  When the rates drop to reasonable rates, they don’t shelter their money; rather, they take advantage of their ability to earn more – and improve the economy by doing so – by investing.  If you take away their profit, you take away their incentive to improve the economy and create jobs.

Some articles to read:

The Reagan Tax Cuts: Lessons for Tax Reform

The Historical Lessons of Lower Tax Rates

Income Tax Cuts Increase Revenues and Help Low Income Families

[End Update, 12/15/10]