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Fairness: Why Democrats are Unable to End the Recession

Think back a few years to the recession Ronald Reagan “inherited” from Jimmy Carter. The 1979 Oil Crisis caused a rapid rise in Oil prices as the Shaw of Iran was deposed and, soon after, Iraq invaded Iran. The instability in the Middle East sent oil prices skyrocketing, and the US Economy into a nosedive.

Ronald Reagan looked to history for answers. Twice before the US had cut tax rates with some incredible and positive results.

  • A 1920’s tax cut caused the economy to grow 59% between 1920 and 1929. The annualĀ  growth rate was 6%.
  • President Kennedy cut taxes and between 1961 and 1968 the economy grew by 48%, with an annual growth rate of 5%.
  • The Reagan Tax Cuts spurred a 4% annual growth rate (from negative growth).

And in each instance, the share of taxes paid by the top earners increased in both total taxes paid and percentage of tax burden.

And despite the insistence from Democrats in the Reagan era and again in the G.W. Bush era, as well as today, the tax cuts were responsible for greater tax revenue for the federal government.

  • Between 1921 and 1928 tax revenues increased from $719 million to $1.164 billion – a 61% increase.
  • The Kennedy tax cuts saw federal tax revenue go from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent.
  • Tax cuts by Reagan saw revenue increase 99.4% during the 80’s.

And how does cutting the tax rate on the “rich” effect the amount of taxes they pay? As you recall, the Democrats are under the assumption that if you cut the tax rate on the rich, they will pay less in taxes. But that has been historically untrue. The rich actually pay more in taxes.

  • In the 1920’sĀ the share of the tax burden on the rich (those making $50,000 and up) climbed from 44.2 percent in 1921 to 78.4 percent in 1928.
  • During the Kennedy era, tax collections from those earning more than $50,000 per year climbed by 57 percent between 1963 and 1966, while tax collections from those earning below $50,000 rose 11 percent. The rich saw their portion of the income tax burden climb from 11.6 percent to 15.1 percent.
  • Under the Reagan tax cuts, the rich went from 48.0 percent of the tax burden in 1981 to 57.2 percent in 1988. The top 1 percent of taxpayers saw their share of the income tax bill go from 17.6 percent in 1981 to 27.5 percent in 1988.

But this is impossible for liberals to grasp. The wealthy work very hard to avoid paying high taxes. When taxes are lowered, allowing their investments to pay off, they don’t mind paying more in taxes on greater income. But the fact is, liberals are caught up in how much the rich actually make, and want to confiscate income they feel is excessive.

Part of the problem in the 1980’s was the Democrats insistence that Reagan pay for the tax cuts he proposed. And their ideal place to cut was the military, which had been neglected under President Carter. As I recall, the Democrats and Republicans were at loggerheads over this Trickle Down Economic theory dubbing it Voodoo economics. After lengthy battles insisting that Republicans do the fiscally responsible thing and pay for the cuts, they finally reached a compromise: The Democrats would irresponsibly spend an equal amount on social programs.

Guess which one paid off? Under the Reagan tax cuts, the economy more than made up the revenue. Unfortunately, the social spending by the Democrats caused the national debt to grow. Reagan was right, as history has shown, but the irresponsible nature of liberals put a cap on the prosperity.

We heard the same tired arguments when George W. Bush wanted to cut taxes. The Democrats demanded tax cuts for the middle and lower class – even those who did not pay any taxes! In the end, Bush was forced to cut taxes on those who pay a small portion of the tax burden, which does nothing to get the wealthy people to put their money back into investments (where the rest of us can reach it), but it makes the Democrats feel good.

And the expiration of the tax cuts were never the Republican’s idea. But I recently heard a left wing pundit blame the impending tax increase on Republicans because they included an expiration date. The Democrats blocked the cuts until the Republicans agreed to the expiration.

But the facts speak for themselves. While middle class tax cuts are a good thing, if the goal is to spur economic growth, tax cuts on anyone other than the wealthy are not going to accomplish anything at all. The middle class are middle class because they don’t have a lot of money sitting around doing nothing. The object of the game is to get the folks sitting on trillions of dollars to invest. To circulate the money through the economy. To trickle down to those that buy the new products the investments by the rich begin to produce.

If we were to take the petty jealousy and class envy out of the mix, the best way to get the economy moving again is to cut, or at least retain the Bush Tax rates for the rich and put a good sized stimulus in the hands of the middle class who will purchase major items like cars, boats and homes. A couple of thousand dollars for people making between $50K and $200K with a tax cut for those making $200K or more will put money into the hands of people likely to spend it on big ticket items where $2,000 is a down payment, and the wealthy will be encouraged to invest in things that capitalize on the stimulus.

And those making less than $50,000? What’s in it for them? Well, jobs, mostly. And the benefits that will come when the wealthy are finally encouraged to get off their money.

But that’s not fair, the Democrats will whine.

Is it somehow more fair to confiscate money from the wealthy, who will dig in and fight the intrusion, and avoid paying taxes to the greatest extent possible with the best lawyers? This only creates an economic environment even more hostile towards business and jobs.

Essentially, the government becomes the middle man taking from the rich and paying the poor and unemployed. It is better to simply move the government aside, let the rich make money and the rest of us have secure jobs again. The government will then need far less money once the welfare and unemployment doles are drained, and they can just sit on the sidelines and watch the revenue roll in.

This is not theory. It is proven economic science.

The Obama Administration is standing in the way of a recovery, no matter how well intentioned and fair they may think they are.

Life is never fair. But life is most fair when do-gooders get out of the way and let life, and business, just happen. But the Democrats insistence on micromanaging our lives and creating a world free of inequity, unless you are rich, or worse, Christian, is perhaps the single most inequitable event in our lives today.

About Tom White

Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog. Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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