Last week during an address at the White House President Trump likened his tax plan to “the tax cut that John F. Kennedy proposed 55 years ago.” This elicited some howls of protest from Mr. Trump’s liberal critics who say it’s historically inaccurate to compare the Trump plan to JFK’s.
Is it? In 1963 Kennedy proposed a tax cut that slashed business and individual tax rates by about 30 percent. It’s true that tax rates were a lot higher then (90 percent in some cases) than now. But the philosophy was the same: lower taxes will get businesses, investors and consumers going again and jump start a lackluster economy.
There are other similarities between Mr. Trump and JFK on taxes. Democrats complain that the Trump tax cut will increase the deficit, just as Republicans made this same fatuous claim against the Kennedy tax cuts. President Kennedy declared at the New York Economic Club that it is a “paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”
He reminded Congress that America’s biggest problem was not the budget deficit but a “growth deficit.”
That sounds almost identical to what Donald Trump is saying today on taxes and what Charles Schumer and Nancy Pelosi are arguing against.
It was JFK who, posthumously was proven exactly right and the tax cut critics were refuted by actual events. After the tax cuts were enacted in 1964, America experienced one of the greatest periods of prosperity in our history.
The U.S. had three straight years of 6 percent growth — the last time that has happened.
Larry Kudlow’s 2016 book “JFK and The Reagan Revolution” documented the post-JFK tax cut growth spurt: “The tax payments by the wealthiest filers nearly doubled. We had many quarters of six percent growth back then.”
That same effect was duplicated when Ronald Reagan chopped the income tax rates from 70 to 28 percent and the corporate rate from 50 to 35 percent. The share of taxes paid by the richest 1 percent rose from 19 percent in 1980 to above 25 percent by 1990, according to IRS tax return data. Total tax revenues surged from $500 billion in 1980 to just over $1 trillion by 1990.
In 1986 when President Reagan’s tax reform chopped tax rates to 28 percent, that bill passed the U.S. Senate — are you sitting down? — by a vote of 97-3. This included the votes of such prominent Democrats as Bill Bradley, Ted Kennedy, Howard Metzenbaum, and Sam Nunn. Where are the pro-growth Democrats today? Are there any?
In 1998 Bill Clinton — who admittedly raised taxes in 1993 — reversed course and signed into law one of the biggest bipartisan tax cuts in history, including a slashing of the capital gains tax. The growth and employment boom was so great that the budget reached a budget surplus.
Democrats say they wish Mr. Trump had put forward a bipartisan tax plan, but where is the Democratic alternative? The only alternative I’ve seen is Bernie Sanders’ proposal to raise tax rates to 50, 60 or even 70 percent. Can anyone with a straight face argue that this would help the economy?
Sadly, the modern Democratic Party today has repudiated JFK economics. Now they are infuriated that Donald Trump has picked up that mantle. Readers can go to the Committee to Unleash Prosperity website and listen to and see video of JFK’s wisdom on taxes. Here’s one more excerpt from a Kennedy 1963 radio address: “Every dollar that is released from taxation and is spent or invested will create a new job and new salaries. And these new jobs will create more jobs and salaries.”
There is one last similarity between JFK and Ronald Reagan and Donald Trump. Economic optimism. They shared a belief that the sky is the limit to American potential. That there are no limits to our economy or our greatness. Mr. Trump says we can grow at 3 or 4 percent. Liberal pessimists dismiss this as a wild-eyed happy talk. They are selling America short. The good news is that most Americans are with Mr. Trump, Mr. Reagan and JFK on America’s untapped potential.
• Stephen Moore is a senior fellow at the Heritage Foundation. He is an adviser to Freedom Works, and co-founder of the Committee to Unleash Prosperity.