Tax Cuts? Senators Obama and Clinton, You're no Jack Kennedy

If you're old enough you may remember Lloyd Bentsen's put down of Dan Quayle during the 1988 Vice Presidential debate. In case your memory is foggy, here is the clip:

Well this got me thinking about the current presidential campaign and the tendency for Democrat candidates to find parallels between themselves and JFK. This is espeically true with the Obama campaign. Then, listening to the campaign speeches Tuesday I once again heard the never ending class warfare mantra of  "tax cuts for the wealthy." As I've noted before, the Bush tax cuts cut a greater percentage at the bottom of the income distribution and the threshold at which taxes are owed was raised. The net effect has been fewer people paying federal income taxes and the wealthy paying a higher percentage. Since more than 85% of federal taxes are paid by people in the top half of the income brackets, by definition tax cuts are going to go to the weatlhy.

Now surely Jack Kennedy would never have stooped to such sinister tax cutting atrocities. Check out this clip of Kennedy the supply-sider from August 13, 1962:

If you listened closely you heard that Kennedy's cuts were across the board and included cuts in corporate taxes. This disporportionately helped the wealthy and had none of the effect of moving the burden to the highest earners as Bush's cuts did. Kennedy understood the economics involved and saw his cuts as a contribution toward economic growth, just as Reagan and Bush did.

Obama and Clinton on the other hand appear not to care about the economics involved. It seems to be more about a populist fervor to "stick it to the man." In that sense, senators Obama and Clinton, you're no Jack Kennedy.

(For a comparison of tax cuts and the redistribution accomplished by the Bush cuts click here.)

Comments

[Bob Robinson]

I'm trying to understand your logic. I really am. I understand that the wealthy will receive tax cuts when we give tax cuts, because the rich pay the most taxes. But your numbers rub against what I understand are the facts: 97% of the benefits of the Bush tax cuts go to the richest 4 percent of households with incomes over $200,000 a year; 54% go to households with annual incomes of more than $1 million.
As Ron Sider asks, "Do evangelical Christians really want to support tax cuts for millionaires paid for by cuts in food stamps, healthcare, housing vouchers, and nutritional programs for poor Americans? Is that the meaning of compassionate conservatism?"

[Michael W. Kruse]

Bob, here is how I frame it. What do the wealthy do with the increased money they retain because of tax cuts? They invest it by buying stocks and putting money on loan, thus making available capital and creating incentives for people to start and expand businesses, thus creating more jobs, thus creating more revenue to tax, thus bringing in more tax dollars for government funding. Keep in mind that rather than being Britney Spears or Tiger Woods far far more of those paying the top taxes are small business owners trying to grow their business. Also keep in mind that this is not right-wing ideology as evidenced by the actions of JFK. If folks want to be critical of presidents who cut taxes, then the point of my post is to be sure to include JFK in that list.

I think we can agree that zero taxes are not workable. Also, that a top marginal tax rate of 100% kills all incentive to invest and expand beyond that level. So what is the optimal balance? That is a legitimately debatable question.

The federal provisions for the poor were drastically less in 1962 than in this decade. Was JFK immoral for cutting taxes when there was so little federal provision for the poor? Is it never appropriate to cut taxes as an economic incentive? These are my questions. It can always and forever by argued that taxes can’t be cut because there is always something else that must be funded.