by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Steve Forbes explains in his latest Forbes magazine column why he believes congressional Republicans need a refresher course in “Tax Cutting 101.”
To gin up a sluggish American economy, both John Kennedy and Ronald Reagan slashed personal income tax rates from top to bottom. The cuts weren’t tied to reductions in spending or to the elimination or clawbacks of personal tax deductions. (For his second big tax bill, which took place five years after the first one, Reagan did do away with numerous tax shelters, but personal tax rates were knocked down.)
Contrast their approach to what Republicans did this time to individuals: They got rid of or sharply curtailed numerous deductions but didn’t slash the tax rates. In fact, for some upper-income earners–the people who disproportionately supply the savings necessary for investments that improve the standard of living–the marginal rate will go up.
Unlike the JFK and Reagan efforts, the GOP’s work on the personal side was pitiful, doing next to nothing to boost the economy. Never in the annals of tax-cutting history has so much effort been expended to achieve so little. Republicans would have been better off enacting a 10% reduction in rates for everyone. To make sure all workers got higher paychecks, they could have repeated what was done in 2011–12 and knocked off the first two points of the federal payroll tax.