In the 1980s, the economy grew as a result of the Reagan tax cuts, and tax revenues increased even as tax rates went down. In inflation-adjusted dollars, government revenue grew by 28 percent between 1980 and 1990 -- and more importantly, the expanding economy created 35 million jobs, the largest number in a comparable period in peacetime in our nation's history.
Democrats' real objection to cutting business taxes, however, isn't its impact on the deficit -- no such fears are slowing adoption of an expensive and poorly conceived health care entitlement, for example. The reasons Democrats won't cut business taxes is that they deem doing so as somehow unfair. The Democrats are wedded to so-called progressive income tax rates: the more you make, the higher your taxes. But progressive tax rates are just another way to redistribute wealth; call it socialism light.
In the coming weeks, Democrats on the Hill are set to introduce a host of new bills aimed at creating jobs, from public works programs favored by unions to special breaks for minority businesses to more government-backed loans for small businesses. But the problem with nearly all of these measures is that they have politicians and government bureaucrats making decisions about what kinds of jobs should be created to what workers in those jobs should be paid. We'd be far better off leaving those decisions to the private sector by simply putting more money in the hands of all businesses by cutting tax rates across the board. If we want to grow the economy, there's no better way than cutting taxes.