Sunday, August 30, 2009

"Kennedy" Once Meant Supply-Side Tax Cutter



His name was Kennedy. He was the preeminent figure in the Democratic Party. And he was a resolute supply-side tax-cutter.

“It is a paradoxical truth,’’ he once told the Economic Club of New York, “that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.’’ What he had in mind, he said, was “an across-the-board, top-to-bottom cut in personal and corporate income taxes.’’

Those were not the words of Senator Edward Kennedy. The speaker - in December 1962 - was President John F. Kennedy (see video above), and his ringing call for tax cuts was no anomaly.

Four months earlier, JFK had called high tax rates a danger to “the very essence of the progress of a free society.’’ In his 1963 State of the Union message, his first priority was “the enactment this year of a substantial reduction and revision in federal income taxes.’’ In the speech he was scheduled to deliver on Nov. 22, 1963, Kennedy planned to report proudly: “We have proposed a massive tax reduction, with particular benefits for small business.’’

In recent days, Ted Kennedy has been justly acclaimed as a lion of the Democratic Party. But how different the party mourning Kennedy today is from the one that nominated him in 1962.

~Jeff Jacoby in
today's Boston Globe

Originally posted at Carpe Diem.

10 Comments:

At 8/30/2009 3:26 PM, Anonymous Anonymous said...

What gets left out of the Jeff Jacoby-Rush Limbaugh quoting President Kennedy is the top rate went from 90% to 72%. Let's try intoducing legislation to what JFK proposed (adjusting for inflation) and see what conservatives say about it.

 
At 8/30/2009 3:35 PM, Anonymous Anonymous said...

Anonymous was right Kennedy was on the upper side of the Laffer curve with his tax reduction then. Today we are likley on the other side of the point where max revenue is extracted. Today the max rate is 35% or soon to be 39% on about the amount that was taxed at 91% back then. One of the things that has happend is that the highest earners have gotten the biggest break.

 
At 8/30/2009 4:06 PM, Blogger 1 said...

"Let's try intoducing legislation to what JFK proposed (adjusting for inflation) and see what conservatives say about it"...

Let's get rid of the rate altogether...

The federal government won't have to extort the wealth of the productive if it sticks to Art. 1, Sec. 8 of the Constitution...

"One of the things that has happend is that the highest earners have gotten the biggest break"...

Wrong again but that's hardly suprising...

Do you have some sort of logical rationale why the highest earners should pay one more penny in federal taxes than you?

Highest earners got the biggest breaks?!?!

The Tax Prof noted back on July 31 of this year: The Top 1% Pays More Income Tax Than the Bottom 95%

Yeah! That's a real break!

 
At 8/30/2009 8:04 PM, Anonymous Anonymous said...

Kennedy used to mean America-loving, anti-communist patriot too. The 60s rid the democrat party of nearly all its patriots. That's why I switched sides in the 80s after voting for Carter.

One alleged rationale for progressive taxes is diminidhing marginal utility of income. That means an extra dollar of tax hurts a rich person less than that same dollar of tax would hurt a less rich person. Aside from the faulty interpersonal comparisons of utility, consider the converse. Cutting a rich person's taxes by $1 benefits him less than cutting a less rich person's taxes $1. So across the board tax cuts help the poor far more than the rich.

You can't have it both ways. If progressive taxes are justified, then tax cuts on everyone necessarily benefits the poor more.

And you simply can't support broad-based benefits supported by a narrow tax base.

The idea of taxing people at different marginal rates is repugnant, immoral, unwise,and un-American!

 
At 8/31/2009 12:20 AM, Anonymous Anonymous said...

For the first two anonymous posts are wrong. The 91% tax rate hit an annual income of over 1,000,000 dollars compared to our rate of just 250,000 per household in 2009 dollars. Plus state, sales, payroll, social security, and payroll taxes are all higher today than they were back then.

You must remember, a populations desire to be taxed decreases in times of peace. You know you have hit the optimal tax rate, when the rate is considered so low it is not bothered to be evaded. We have not reached that rate yet....

 
At 8/31/2009 3:15 AM, Blogger OA said...

"Let's try intoducing legislation to what JFK proposed (adjusting for inflation) and see what conservatives say about it."

No conservatives say his rates were good, just that he had the right idea in cutting tax rates to encourage growth.

But try this using the low tier tax rate here:
http://www.ntu.org/main/page.php?PageID=19

The 1964 bottom bracket rate is 16% up to $1,000. (footnote at the bottom says married filing jointly)

Using the CPI, the $1,000 in 1964 is equivalent to just under $7,000 now.

So instead of 10% tax up to $16,050 (2008), it would be 16% tax up to $7,000 and the next tier after that. That 16% exceeds the 2008 rate even up to $65,100. Not sure what that next 1964 tier is, but it's definitely higher than 16%. Quite a tax increase even for someone with just $20,000 in income. Using a 20% second tier gives a tax increase of 70%, and 18% gives a 57% tax increase vs. 2008 rates.

What would liberals say about Kennedy's inflation adjusted rates versus the Bush rates?

 
At 9/02/2009 10:06 AM, Anonymous Anonymous said...

Thank you for posting this and reminding us of the important piece of history here that is commonly overlooked!

 
At 9/02/2009 10:10 AM, Anonymous Anonymous said...

The 90% tax rate was a farce. Almost nobody (except for Joe Louis) actually paid it. The money-wise people just put their money in tax shelters, and, in effect, became non-taxpayers. Billions of dollars that could have been in productive ventures just sat idle. That's what JFK, and later, Reagan recognized.

When Kennedy dropped the rate to 72%, some of that money became "unfrozen" and went into actual investments. Thus, more tax dollars flowed in as JFK predicted, and the wealthy picked up a greater percentage of the nation's tax burden.

When Reagan came to office with a 70% tax rate in place on the top 1%, that group was paying 19% of total tax burden. Following phased tax cuts down to a 28% top rate, venture capital exloded 100-fold, and by the time he left office the top 1% was paying 28% of the tax burden. In the most recent tax year statistics available, the burden of the top group has increased to 40%. So, now do we want to drive them back to tax-sheltered investments by imposing punitive taxation? The middle class will suffer the most with that philosophy.

 
At 9/02/2009 10:30 PM, Anonymous Anonymous said...

Help me here figure it out? Was JFK closer to Reagan or his brother Ted near the end of Ted's life? its a no brainer, JFK had more in common with Reagan.

Taxes kept low to stem recession:
Reagan- Yes
JFK- Yes
Ted- NO

Use of the military to detere aggression:
Reagan: Yes
JFK: Yes
Ted: NO

Military Supporters:
Reagan- Yes
JFK- Yes
Ted- NO

Kennedy like Reagan understood that the threat of using military force, the occasional use of military force held your enemies in check. The key is poker. Cuba and Russia thought JFK would act. Just as Reagan had the Russians, the media and democrats fooled. A good play means nothing if your opponent doesn't believe you will act. As Carter and Clinton fount out. Hell Reagan even had his kids Patty and Ron fooled. In fact Reagan schooled those two many times.
Unlike modern democrats i have grown to respect JFK, I find that in the modern time he would be viewed more as a moderate, maybe even a right of center. He served in the Navy, the only actual Kennedy that deserves to be in Arlington. That he understood economics, that he didn't resent the job creators. That he wasn't afraid to use military might, or paint our military in a negative light. If more liberals were like JFK we wouldn't see them as un- American.

 
At 9/04/2009 12:01 AM, Anonymous Anonymous said...

Love you mark from rich and tina in col , oh . Keep on making liberals the mad and this comes from a black man thanks brother fight on. Where listing everynight to you here on 610 wtvn.

 

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