An opinion piece in the Wall Street Journal by Martin Feldstein verifies that Mitt Romney’s plan to cut taxes is mathematically possible. Of course it is. Romney wants to reduce ALL income-tax rates by 20%. Those who oppose this reduction don’t know economic history.
Back in the 1920’s the US was trying to recover from the post-World War I recession. Budget Director Dawes and Secretary of the Treasury Mellon advocated cutting all taxes back against strong Democratic opposition. The Democrats feared that tax cuts would lower revenues creating a greater deficit and debt for the United States. They wanted higher taxes. Dawes and Mellon convinced Congress to initiate a series of tax cuts that created the most prosperous decade in American History. However, they just didn’t cut taxes but also cut government spending. This resulted in financial surpluses in seven out of eight years. The Coolidge Administration also used the revenue surplus to pay down the national debt.
Romney wants to eliminate the Alternative Minimum Tax and the estate tax. His plan includes limiting tax deductions and other loopholes that allow high-income taxpayers to reduce their tax payments.
Critics claim these measures would require a large tax increase on the middle-class to avoid raising the deficit. (Government spending of over a trillion dollars since 2009 has raised the deficit and debt.) Not according to history! It was done back in the 1920’s with outstanding success. If anything, middle class income increased in the 1920’s with the tax cuts.
John Kennedy in the 1960’s is another example. He cut all taxes by 30%. The economy boomed again. The boom tumbled down only when Lyndon Johnson started his War on Poverty and initiated Medicare and Medicaid. These social welfare programs created a wash of red ink which continued to the present.
Romney at least has a plan while Obama has no plan. Remember that the Obama Administration hasn’t even had a budget to limit their spending for over three years. No budget allows unlimited spending. No budget means that the Obama Administration is pushing us over the “financial cliff.”