Bright economic future calls for extending tax cuts

The surest way to harm the economy, slow our growth, raise unemployment and reduce revenues would be to allow capital gains and dividend taxes to rise to pre-2003 levels.

And by the way, the capital gains tax is not a tax on the rich, who are already rich; the capital gains tax is a tax on the poor and the workers who want to get rich. You can't get rich on wages. The only way to create wealth is to work, save, invest and make a profit, then reinvest.

If the Republicans in Congress can't articulate this essential ingredient of free enterprise and democratic capitalism, they should go back and reread Abraham Lincoln, Calvin Coolidge, John F. Kennedy and Reagan. Every cut in tax rates on the factors of production, i.e. labor and capital, has resulted in more economic growth and an increase in tax revenues.

Arthur Laffer of the University of Southern California was correct back in the mid-'70s, when he drew a curve on a blackboard for me showing that the two places on the curve at which no revenue is raised are at 100 percent tax rate and zero tax rate. The purpose of leadership is to find the level of taxation at which workers, savers, investor and entrepreneurs are willing to maximize this output. History says anything above 20 percent or 25 percent loses, not gains, more revenue.

If you want to "soak the rich," lower the tax rate to a point at which they have no incentive to invest offshore or in tax shelters or to play golf on Fridays as dentists and doctors did back in the 1970s, when the top income tax rate was 70 percent and the top capital gains tax was 50 percent.

Reminder to the Republicans in Congress and to the White House speech writers, as well: Stop worrying about a so-called post-DeLay vacuum, stop worrying about '06 or '08 elections. Just get back to a pro-growth, pro-trade liberalization, pro-ownership society in which every child and family in America can own a share of the American dream and a stake in America's future.

We want our nation to be a place where every child can grow up, as Mr. Lincoln envisioned, where he or she can work, save, own and someday hire others to work for them and maximize their output. That, Lincoln observed, is the true American system.

Now, more than ever, Republicans must halt this drift into protectionism, anti-immigration, static analysis of tax policies and xenophobia, all of which will consign our nation to decline and our party to defeat.

We must prove Hegel wrong and Abraham Lincoln right.