Another phony study claims high top tax rates just great

Dec. 16, 2012

By John Seiler

If I got paid $1,000 for every time I refuted a phony government study, I’d be as rich as that socialist billionaire, Warren Buffett.

The latest phony study comes from the “non-partisan” — meaning pro-big government — Congressional Research Service. It supposedly says cutting tax rates didn’t stimulate the economy.

I even can write the refutation by memory.

After World War II, in 1946, everyone feared the Great Depression would return. Instead, taxes were cut sharply and the economy took off. Click here for a study on the boom.

In 1964, the Democratic JFK-LBJ tax cuts were enacted, dropping the top income tax rate from 91 percent to 70 percent, and the economy zoomed in one of the greatest booms ever. The details even are in liberal Robert Caro’s latest volume of his LBJ biography, “The Years of Lyndon Johnson: The Passage of Power.”

In 1981, Ronald Reagan cut the top tax rate from 70 percent to 50 percent, effective 1983. In 1983, the economy soared. In 1986, he cut the rate again to 28 percent, and the recovery kept soaring.

In 1996, Bill Clinton — yes, another Democrat — cut the top capital gains tax rate from 28 percent to 20 percent and fueled the dot-com boom.

In 2001 and 2003, President George W. Bush cut the top income tax rate from 39.6 percent to 35 percent; and the top capital gains tax rate from 20 percent to 15 percent. The economy grew strongly — but only for a couple of years. Unfortunately, Bush made serious mistakes in other areas. The taxes were temporary, hence the impending “fiscal cliff” we face on Jan. 1. He went on wild spending binges that ended the Clinton surpluses he inherited. He allowed Fed Chairman Alan Greenspan to debase the dollar. And he goosed the housing market, leading to a boom-bust cycle and the 2008 crash.

In January, we’re likely going to see some hefty tax increases at the federal level; and tax increases already have been imposed in California.

So in 2013 we’ll see whose theory is right, mine or that of the Congressional Research Service. Here’s a bet, which will be effective only if the CRS contacts me. If the tax increases spur the economy, as the CRS contends, then I’ll shave my head. If the economy fails to ignite, then the CRS goes out of business and refunds the money it wastes to taxpayers.