So let me get this straight. After all the Democrats in the House and Senate voted against the One, Big, Good Bill – and therefore promoted a tax increase of approximately $5 trillion – now a number of presidential candidates, such as Senators Cory Booker and Chris Van Hollen, are coming up with plans that will eliminate the income tax for middle-class Americans, this according to the news of the Wall Street Journal. The two men have different plans, but basically, as I understand it, they will be maxing out the standard deduction and other credits, so the first $75,000 of income will be tax free.
So, are the Democrats likely to get another tax cut? Is the ghost of John F. Kennedy, the last Democratic president who lowered tax rates and introduced supply-side economics, is Kennedy’s ghost hovering over their shoulder? Do they agree that President Trump was right when he ran them over in 2024 with across-the-board tax cuts, no tip tax, or overtime, big breaks for seniors, and so on.
Now I don’t agree with the details of the Democratic plan, we’ll talk about that in a minute. But even the mere suggestion that Democrats believe that lower taxes, at least for some people, are better than higher taxes for everyone else, would be a good thing. Just maybe.
Now, what Booker and Van Hollen are doing is basically increasing the standard deduction for middle class earners to somewhere around $75,000 to $100,000 a year. I make it very simple, but its the essence. Now here’s the problem, they want to raise taxes more on the high earners, the high earners.
Sen. John Barrasso, R-Wyo., discusses Democrats’ efforts to block DHS funding in ‘Kudlow.’
According to the Journal article, Mr. Van Hollen calls for a surtax that tops out at 12 percent on top of existing taxes, which would drive the top rate to nearly 50 percent, or if you live in New York or California, you’ll be taxed in the mid-60s percentile. Mr Booker will raise the top rates from 35 per cent and 37 per cent to a new 41 per cent and 43 per cent brackets.
Adoptive tax rates like these can reduce employment and investment, leading to a depressed economy, high unemployment, and in turn an even tighter budget. I don’t care how many dogged people want to protect the income tax, turning to a punitive tax rate for successful businessmen and wealthy individuals is a non-starter.
Supply side economics as Kennedy or Art Laffer would tell you, suggests that the more you tax the less you get. Cherish success and prosperity, you will get less success and prosperity. But if you charge less tax, you will encourage more effort and risk taking. And that is the ticket to prosperity.
As Kennedy has said many times, a rising tide will lift all boats. There is no need to punish others while rewarding others with some kind of weird social redistribution scheme that has been tried many times before and always failed. But you know what folks? At least there are a handful of Democratic senators who don’t think tax cuts are dirty words. So, is JFK coming back?
