Public Tax Hikers, Private Tax Evaders

by Adam Nicholson - No Comments
Posted on August 2nd, 2010 11:37 am

Art Laffer, longtime AFBI friend and estate tax repeal ally, wrote a great article in today’s Wall Street Journal.

Laffer explains the hypocrisy of wealthy politicians who publicly favor high tax rates but privately do all they can to avoid them:

“Howard Metzenbaum, the former Ohio senator and liberal supporter of the death tax chose to change his official residence to Florida just before he died because Florida does not have an estate tax while Ohio does.”

Metzenbaum, of course, is not alone. Just recently, Senator John Kerry (D-MA) and Representative Charlie Rangel (D-NY-15) avoided private taxes that they vehemently supported and imposed on others.

As Laffer points out, what we need are modern-day John F. Kennedys -- politicians who understand the relationship between high taxes and tax revenues.

President Kennedy enacted one of the most sweeping tax cuts in history. The result? Huge increases in tax revenues from the wealthiest Americans.

“When President Kennedy cut the highest income tax rate to 70% from 91%, revenues also rose. Income tax receipts from the top 1% of income earners rose to 1.9% of GDP in 1968 from 1.3% in 1960.

Even when Presidents Harding and Coolidge cut tax rates in the 1920s, tax receipts from the rich rose. Between 1921 and 1928 the highest marginal personal income tax rate was lowered to 25% from 73% and tax receipts from the top 1% of income earners went to 1.1% of GDP from 0.6% of GDP.”

President Kennedy articulately made the case for tax relief:

“Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets.

…reducing taxes is the best way open to us to increase revenues.”

Here’s a toast to those in Congress now who govern according to this principle. And to all the new Members come November, may they join with us in raising tax revenues by permanently repealing the federal estate tax.

Read Laffer’s full article here.

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