Lawrence Kudlow‘s latest column at Human Events reminds us of the bipartisan success of previous federal tax cut plans.
Fifty-four years ago, at the Economic Club of New York, President John F. Kennedy unveiled a dramatic tax-cut plan to revive the long-stagnant U.S. economy. He proposed lowering marginal tax rates for all taxpayers and reducing the corporate tax. He advised lowering the top tax rate from 91 to 65 percent and closing tax loopholes. Five times during the speech he used the word “incentives.”
In perhaps the most famous line from that path-breaking speech, he said: “In short, it is a paradoxical truth that tax rates are too high today and tax revenues too low, and the soundest way to raise revenues in the long run is to cut rates now.”
Kennedy had already in 1962 lowered investment taxes on business. And after his tragic assassination, his broader tax proposals were passed into law in early 1964. And they worked. The U.S. economy grew by roughly 5 percent yearly for nearly eight years.
Almost 20 years later, Ronald Reagan launched a 30 percent tax-rate reduction to save the economy from the high-unemployment, high-inflation 1970s. Reagan acknowledged many times that he was following in Kennedy’s footsteps. Under the Gipper, tax rates were slashed from 70 percent to 28 percent, corporate taxes were cut, and numerous loopholes were closed.
And the American economy grew mostly between 4 and 5 percent annually for over 25 years.
By the way, both men, Kennedy and Reagan, followed a simple growth model of what I call tax cuts and King Dollar. Both men also reached across the aisle to garner bipartisan support for their plans.
This past week, Donald Trump went a long way toward joining their ranks. Speaking before the Economic Club of New York, he delivered a positive, optimistic growth message that falls squarely inside the JFK-Reagan model.
