Many on the left cannot understand why Republicans push for tax cuts when we have record deficits. They refuse to look at the examples of Reagan and George W, and understand how economic growth is spurred, and government revenues go UP when taxes are cut for corporations and individuals. Blinded by their zeal for “fairness” (how fair is it that half the people in the country don’t pay any taxes?), they can’t see past “the rich getting richer” to improved conditions for everyone.
Peter Ferrara has a nice explanation of the phenomenon at Forbes. All you have to do is look at the evidence:
The Reagan boom was extended to 25 years with the help of other rate cuts. The Republican Congressional majorities, led by House Speaker Newt Gingrich, cut the capital gains rate by nearly 30% in 1997. President Bush cut the Clinton era tax rates as well, with the bottom rate slashed by a third to 10%, and the top rate cut to 35%. Bush also cut the capital gains tax rate by 25%.
Critics have the most fevered difficulties in dealing with the facts regarding the effects of these Bush tax cuts. They quickly ended the 2001 recession, despite the contractionary economic impacts of 9/11, and the economy continued to grow for another 73 months. After the rate cuts were all fully implemented in 2003, the economy created 7.8 million new jobs and the unemployment rate fell from over 6% to 4.4%. Real economic growth over the next 3 years doubled from the average for the prior 3 years, to 3.5%.
In response to the rate cuts, business investment spending, which had declined for 9 straight quarters, reversed and increased 6.7% per quarter. That is where the jobs came from. Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled. Capital gains tax revenues had doubled by 2005, despite the 25% rate cut! That should not have been a surprise. Capital gains revenues rose sharply after the Gingrich capital gains cuts in 1997.
Read more of Peter Ferrara’s article at Forbes