Thom Hartman has done a great comparative analysis of the much ballyhooed, by the right, Kennedy tax “cuts” versus the Reagan tax cuts. He begins by pointing out that the two were not really at all alike — though Reagan did like to constantly use Kennedy’s plan as proof that his would do as he predicted.
Much of Reagan’s prediction was based on the same sort of sleight of hand employed by Mitt Romney just last year when he promised that if he was elected he would create “x” number of jobs in his first year in office. The problem with that prediction was the fact that the CBO had already put out a report saying that the exact number of jobs he was promising was what would be created this year no matter who was President. In Reagan’s case, it was the increase in revenue that he said a tax cut would bring again citing the Kennedy “cuts,” but the fact is the economy was growing and would bring an increase in revenues whether taxes were cut or not.
As Thom points out though, Kennedy never did cut taxes. In fact, what we refer to as the Kennedy tax cuts were proposed by him in 1960 and presented to Congress in 1963 by Johnson. More importantly, they weren’t really tax cuts at all because, while the rates were cut, loopholes such as dividend withholding and expense accounts were closed with the net effect being that the taxes on the very wealthy were actually raised. No one had been paying anywhere near the top rate of 91% but after the rate was reduced to 74% they were in fact paying a higher effective rate than they had under the old schedule due to the loss of loopholes. That is the reason that revenues went up after those tax “cuts.”
When debating Nixon, Kennedy said that his plan would raise $700 million to one billion in revenue per year and that he would spend that extra income on things such as education and housing with a smaller share going to wiser defense spending. In today’s dollars, that billion dollar tax hike would amount to hundreds of billions.
Reagan, on the other hand, did in fact cut taxes for the wealthy which in itself raised no additional revenue. The only increase in revenue was due to the fact that the economy was growing. All of the increased revenue was put into defense spending as well as many times that amount in deficit spending. Sadly, nothing went to children or education.
Contrary to what the TEApublicans would have us believe, there is no upside for anyone other than the super wealthy when we give more tax cuts to the super wealthy. They will not create more jobs and they will not end up paying more taxes. Instead, they will just continue to grow their own bank accounts fatter.
Watch what Thom has to say on the subject.