I was glad to hear Sen. John Kerry quote Abraham Lincoln as he accepted the Democratic nomination, but he did not read Lincoln far enough. Lincoln famously said, "I don't believe in a law to prevent a man from getting rich; it would do more harm than good." He continued, "When one starts poor, as most do in the race of life, free society is such that he knows he can better his condition; he knows there is no fixed condition of labor for his whole life." This is what Lincoln called the True American System. The rhetoric reverberating from the halls of the FleetCenter, however, was far less optimistic, far less edifying and certainly not consistent with the dynamic American system envisioned by Lincoln.
The Kerry-Edwards economic agenda is now clear: They see the American system as a zero-sum game. This view was best expressed by former President Clinton, who said, "I almost sent them (Republicans) a thank you for my tax cut until I realized the rest of you were paying for it." What a contradictory view of America from someone who signed into law a 25 percent cut in the capital gains tax.
Kerry added, "I will roll back the tax cuts for the wealthiest individuals who make over $200,000 a year ...," which would include roughly 70 percent of all small businesses. Promising middle-class tax cuts while raising them for people earning more than $200,000 is not only class warfare at its worst, it's contrary to American values. It raises the cost of capital, and it contradicts everything we know about where revenue comes from.
The top 2 percent of taxpayers pay more than 40 percent of all federal income taxes. The New York Times recognized that "falling incomes, rather than tax cuts, appear to count for the greatest decline in income taxes paid." Not only left-leaning Democrats, but too many Republicans don't understand the difference between tax rates and tax revenue. As John F. Kennedy reminded us in 1962, "It is a paradoxical truth that tax rates are too high and tax revenues too low, and the soundest way to raise revenues in the long run is to cut rates now."
If you want to soak the rich, cut tax rates. As secretary of Housing and Urban Development, I spent a lot of time talking to people who lived in public housing. I never heard one person say they want to make the rich poor; they only want the opportunity to get ahead and get out of poverty. High tax rates don't hurt the rich, who can shelter their income; high tax rates just keep the poor in poverty.
You can't get rich on wages. The only way to get rich is to earn, save and invest.