The so-called Bush "tax cuts for the rich" were very good for the US economy. It was the right medicine in the post 9-11 world.
What did we get? We got growth! What about the budget deficit? It was never more than 3% of GDP, a very low historical number.
What kind of stimulus do we need? Cut taxes! Let people keep their money!
IBD has a good message for the Obama team:
"If Obama is serious about getting the economy going again, he could do a number of things — and right away, not years from now, as with the $675 billion to $775 billion he plans to spend on infrastructure and imaginary "green jobs."
These steps would include:
Cutting corporate tax rates.
U.S. businesses pay a top rate of 35% on income. That rises to 40% when you add in state taxes. In Europe, the average corporate tax in 2007 was 24.2%, according to the international consultancy KPMG.
Is it any wonder some of our most successful corporations move offshore?
Cutting corporate taxes even to 25% would improve investment returns — and lead to more jobs and output.
• Slashing capital gains tax rates.
This is a no-brainer. Every time cap-gains tax rates have been cut, a bull market has ensued not too long after and the economy has boomed. Today the cap-gains rate on long-term investments is 15%. Obama has suggested it should rise to 20%, a 33% increase. He's also suggested he might zero-out the rate for small firms and startups.
The latter would be better than nothing, but broad cuts in cap-gains rates would be best of all.
They would lead to a surge in capital formation, business incorporations and millions of new jobs.
A recent report from Ernst & Young found that U.S. cap-gains rates are already higher than in more than half of the world's top-performing economies.
Raising them would only make us less competitive.
• Not raising taxes on the rich.
This would be hard to do, given Obama's rhetoric on the stump. But those with incomes over $250,000 a year are the most likely to save and invest.
And already they pay nearly 48% of all taxes, while 44 million middle- and lower-income households pay no taxes at all.
Obama has rightly called small businesses "the engines of our job creation." Well, 65% of those with incomes above $250,000 are small-business owners.
According to Heritage Foundation data analyst Guinevere Nell, Obama's plans would give just 16% of small businesses a tax break.
If Obama wants to help business create millions of jobs, putting a target on the backs of entrepreneurs won't help.
While he's at it, Obama should repeal the alternative minimum tax (AMT), the "millionaire's tax" that increasingly hits people not at the top incomes, but in the middle."
Republicans should draw the line on the stimulus program. Force Obama to stimulate rather than engage in another form of distributing wealth.
Cut taxes and you will see a quick recession. Distribute wealth and you will need another stimulus after recepients have spent their money.
