- The Washington Times - Monday, August 4, 2008



Tax cuts help the economy. High taxes hurt the economy. It’s that simple.

The only debate left, it seems, is how to cut taxes. It’s always a politically charged dialogue, but it seems everybody agrees on tax cuts for the middle class, who make up the bulk of our population.

Most taxpayers have received the most recent tax cuts, or tax rebates, in the”Economic Stimulus Package.” These tax cuts cruised through a Democrat-controlled House and Senate.

John F. Kennedy cut taxes in the 1960s because they were too high, and the economy was stalling. Ronald Reagan cut taxes in the 1980s because they were too high, and the economy was stalling. In both cases, cutting taxes worked. The economy rebounded. Tax revenues soared. “Reagan-omics” was a success.

Deficits rose in the 1980s, due much to President Reagan’s heavy spending to rebuild and modernize the Army, Navy and Air Force to counter - and ultimately overwhelm and roll back - Soviet expansionism. World War III between two nuclear superpowers was averted. It was a wise investment. After tax cuts in 2003, the economy again grew, jobs were created and revenues rose. Deficits grew, this time due to necessary spending related to Sept. 11, 2001, and Hurricane Katrina, and other spending.

See the obvious pattern? But enough of the past; let’s look to the future. A brief look to future possible U.S. administrations shows each candidate favors some form of tax cuts.

John McCain, of my party, and Sen. Barack Obama across the aisle, both openly express support for tax cuts in one form or another.

A recent public statement by Mr. Obama, a liberal Democrat, boasts “I helped those workers and took their fight to the state Senate, passing tax cuts.” While she was still in the race, Hillary Clinton likewise proudly backed middle class tax cuts. In one televised clip, she explicitly stated,”We know you can’t solve economic problems with political promises; the stakes are too high.” The ad then flashes her promise of “immediate tax cuts for the middle class.”

As no surprise, John McCain has stated he would make the 2003 tax cuts permanent, and “reduce taxes on 25 million middle class families.”

Class warfare targeting the rich is risky business. A federal luxury tax on yachts in 1991 took aim at the wealthy with a 10 percent tax on luxury yachts costing over $100,000. The result? The wealthy simply stopped buying U.S.-made yachts.

In my district, a boat manufacturer closed its factory in Florida and laid off most of its workers in New Jersey. In all, over 1,400 workers at both plants lost their jobs. These were middle class American workers. Their products, of which about 15 percent were exported, were ruined. Sales fell over 80 percent, from nearly $100 million to $11 million. Yacht builders in Europe, Australia, New Zealand, Taiwan, Japan and Hong Kong took up the slack in the yacht market. More than 6,700 jobs were lost across the U.S.

We are today in a federal deficit for a number of reasons. The White House estimates the deficit will be at least $410 billion. Let me first say that if we raise taxes on businesses and workers, the $410 billion will likely rise, and the economy will almost certainly get worse.

Most notably, the economic downturn began in the first quarter of 2000 when the dot.com bubble burst. Tax cuts and rebates passed earlier in 2001 were being injected into the economy. Our economy was brought to a standstill on Sept. 11. The military response, the rebuilding of New York and saving the airlines imposed a high toll on the economy.

Though I am retiring from Congress soon, I am glad that all the leading presidential contenders agree that tax cuts are a good thing. I hope our country, policy makers, legislators, economic community, and even the general public will accept the obvious: Tax cuts are healthy for the economy. They can create jobs and new investments, and put more money back into the economy, and back into the pockets of the people who earned it.

Low taxes and controlled spending are the best bets for a long-term, healthy economy. Raising taxes is the worst bet.

Rep. Jim Saxton of New Jersey is ranking Republican on the U.S. House and Senate Joint Economic Committee. He served as chairman 1997-98, 2001-02, 2005-06, and has served in Congress since 1984.

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