The truth is that every reasonable economist could have told you that the Joint Committee on Taxation was going to be very, very wrong, because tax policy affects economic activity. Lowering the capital gains rate stimulates economic growth, and by extension increases tax revenue for the government. Capital gains tax collections go up as economic activity grows, and of course income taxes rise as incomes get bigger.
Lowering capital gains taxes increases wealth for everybody. As economic growth jumped from under 2% before the tax cuts to over 3%, unemployment dropped and the stock market began to soar. Those “tax cuts for the rich” made everybody in America better off.
Which gets me back to my original point: we’ve seen this movie before, and know the ending. Reducing taxes on income and capital helps to stimulate the economy. The tax cuts from Reagan onward explain why the American economy over the past 25 years has so outperformed our European competitors. When Ronald Reagan was elected, the top marginal tax rate was 70%; today it stands at 35%. And since Reagan’s election our economy has outperformed Europe’s by a large margin.
The evidence is so clear it can be said to be irrefutable. Yet liberals still advocate the false idea that wealth distribution, not wealth creation should be the most important goal of government tax policies. They argue that Europe, not America, has discovered the key to economic success.
I can only conclude that liberals continue to promote the false belief that the economy is a zero-sum game of the “people vs. the powerful” because it benefits them. The false notion that some cabal of wealthy people is raping the American working man helps liberals gain and keep economic and political power.
That’s why I can no longer believe that the smart and informed liberals are simply mistaken: they can’t be, because the evidence is so clear that “tax cuts for the rich” benefit the entire country. Liberals aren’t well-intentioned but mistaken; they are cynically promoting falsehoods in order to gain money and power.
All the while claiming that conservatives are selfish and liberals are selfless. 1984, anyone?
Be the first to read David Strom's column. Sign up today and receive Townhall.com delivered each morning to your inbox.