A Quote by Patrick McHenry
Marginal tax rates are the lowest they've been in generations, and all we can talk about is tax cuts.
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Well, I think the reality is that as you study - when President Kennedy cut marginal tax rates, when Ronald Reagan cut marginal tax rates, when President Bush imposed those tax cuts, they actually generated economic growth. They expanded the economy. They expand tax revenues.
What Mae West said about sex is true about taxes. All tax cuts are good tax cuts; even bad tax cuts are good tax cuts.
We need to consider a financial transactions tax. And we need to ask whether the top marginal tax rates are really appropriate, given that the effective tax rates paid by the wealthy are often actually lower than those paid by the rest of us.
If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment. A top marginal consumption tax rate of 100 percent would simply mean that if a wealthy family spent an extra dollar, it would also owe an additional dollar of tax.
If we think that high marginal tax rates are bad because they distort incentives, the same is then true for tax subsidies.
You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.
If there is one thing that most economists agree about in the realm of tax policy, it is that it's best to broaden the base of any tax, all else being equal. That means minimizing the number of deductions and exclusions from taxable income in order to lower marginal rates and reduce distortions.
By keeping most tax rates at present levels, Obama and the Democrats will claim that they have championed tax cuts for the middle class.
Over the past 100 years, there have been three major periods of tax-rate cuts in the U.S.: the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s. Each of these periods of tax cuts was remarkably successful as measured by virtually any public policy metric.
We certainly could have voted on making the middle-class tax cuts and tax cuts for working families permanent had the Republicans not insisted that the only way they would support those tax breaks is if we also added $700 billion to the deficit to give tax breaks to the wealthiest 2 percent of Americans. That's what was really disturbing.
Coolidge was a pragmatist. He didn't start out with a tax theory. But he observed over time that lower tax rates sometimes brought in extra revenue. The success of his and Treasury Secretary Andrew Mellon's experiment with rate cuts has been obscured by our modern history books.
Capital available for individuals to start and expand businesses would increase with regulatory and strategic tax reforms, like reducing marginal rates, repealing the alternative minimum tax, and making the U.S. the most welcoming place for employers to relocate and create jobs.
I actually think the border tax - the concept of border tax is more of a trade issue than it is a - so when we talk about income coming in, I believe border tax in its form, if we use that, reciprocal tax is a tax that I really love because basically nobody can fight it.
We need to lower tax rates for everybody, starting with the top corporate tax rate. We need to simplify the tax code. The ultimate answer, in my opinion, is the fair tax, which is a fair tax for everybody, because as long as we still have this messed-up tax code, the politicians are going to use it to reward winners and losers.
What the Tea Parties are standing for is constitutional principle. It's not fundamentally about tax rates or whether to have a consumption tax or an income tax. It's about adherence to Constitution and the principle of limited government.
Local tax increases can cause high-net-worth individuals to move, tax experts said; tax avoidance and tax arbitrage are multitrillion-dollar affairs, and rich people are sensitive to tax rates. But many of the people who move when their home state raises taxes are close to retirement anyway.
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