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A tax plan for a better America?

Posted: August 28, 2008 9:03 p.m.
Updated: October 30, 2008 5:01 a.m.
 
"It's a paradoxical truth that tax rates are too high today, and tax revenues are too low, and the soundest way to raise revenues in the long run is to cut tax rates now."

- President John F. Kennedy

The cornerstone of President Kennedy's economic policy was tax cuts. He understood that lower taxation meant more freedom, and freedom births entrepreneurship and investment, which ultimately will produce more wealth for more Americans.

The Kennedy tax cuts generated annual growth rates in excess of 5 percent from 1964 to 1967.

The Kennedy vision of faith in the individual is in stark contrast to Democratic nominee Barack Obama's faith in income redistribution and bigger government.

I believe the best way to determine future performance is to view past results. Just a cursory examination of Obama's brief time in the U.S. Senate paints a clear picture of his commitment to larger government and his antipathy toward people aspiring to better themselves.

The Obama voting record includes:

n Voted NO on allowing AMT reduction without budget offset (March 2008).

n Voted NO on raising the Death Tax exemption to $5 million from $1 million (Feb. 2008).

n Voted NO on repealing the Alternative Minimum Tax (March 2007).

n Voted NO on raising estate tax exemption to $5 million (March 2007).

n Voted NO on supporting permanence of estate tax cuts (Aug. 2006).

n Voted NO on permanently repealing the "death tax" (June 2006).

n Voted YES on $47 billion for military by repealing capital gains tax cut (Feb. 2006).

n Voted NO on retaining reduced taxes on capital gains and dividends (Feb. 2006).

n Voted NO on extending the tax cuts on capital gains and dividends (Nov. 2005).

Obama is opposed to making permanent the 2001 tax cuts, but is offering a nebulous "Middle Class Tax Cut."

For those who study history, Obama is stealing a page from the 1992 Clinton campaign playbook. Not only did Clinton not offer a middle class tax cut, once elected, he passed the largest tax increase in the history of the Republic.

"We heard the president say he wants to make tax cuts for the wealthiest Americans permanent, when we know that at a time of war and economic hardship, the last thing we need is a permanent tax cut for Americans who don't need them and weren't even asking for them. What we need is a middle class tax cut, and that's exactly what I will provide as president."

- Senator Barack Obama

(Source: Response to 2008 State of the Union address Jan 28, 2008.)

In addition, Obama wants to double the capital-gains tax rate. This will affect Americans up and down the income ladder. Steve Moore of the Wall Street Journal, in a 2005 editorial, pointed out almost half of all tax returns reporting capital gains came from households with incomes under $50,000, while more than three-quarters came from households earning less than $100,000.

Obama also proposed uncapping the payroll tax (Social Security), another blunder that will affect nearly everyone. The current cap on payroll tax is $102,000. By removing the cap, Obama will be penalizing firemen, cops, teachers, and many other hard-working Americans.

The historical record proves that raising taxes reduces wealth and lowers government revenue.
In 1930, President Herbert Hoover raised the marginal tax rate from 25 percent to 63 percent. President Franklin D. Roosevelt pushed them to 79 percent later in the decade.

Although these tax hikes did not cause the Great Depression, they helped lengthen it.

In 1991, California Gov. Pete Wilson increased tax rates to close a $15 billion budget deficit that he had inherited from the previous administration. The result was a revenue drop of $2 billion in two years.

This week at the Democratic National Convention, speakers lauded the Clinton economy. The truth is revenue grew more slowly under Clinton and his tax hikes than under Reagan and his tax cuts.

There is no denying it - Obama wants to eliminate the "capital" from capitalism. If the government robs rich people of their money, they won't have the funds to invest in new business and create new jobs. So Obama will harm the very people he claims to be helping.

President Kennedy in his 1963 address to Congress said it best: "I repeat: Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve - and I believe can be done - a budget surplus."

Obama's election would not be a return to Camelot, but to Hooversville.

Scott Thomas Wilk, a Santa Clarita Valley resident, is a member of the California Republican Party and elected member of the 38th Assembly District Republican Central Committee. His column reflects his own views, not necessarily those of The Signal.

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