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OPINION & EDITORIAL

Tax cuts promote economic growth

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by Will Smith

Tuesday, October 17, 2006

Enjoy the economy — while it lasts. As we head into the midterm elections, the Democrats look poised to retake the U.S. House of Representatives for the first time since the 1994 Republican "Contract with America," and the Dems are within striking distance of taking control of the Senate, too. A Democratic takeover includes an agenda, expressed by House Minority Leader Nancy Pelosi, to undo the Bush tax cuts that are finally paying off in the American economy.

Since the controversial $1.35 trillion centerpiece of the Bush tax cuts was passed in 2001, Democrats have cried foul, claiming that these cuts only benefited the top 1 percent of the nation while squeezing the middle class. This claim is untrue. The lowest tax bracket had their federal income taxes cut the most, from 15 percent to 10 percent, a one-third decrease. Yet the highest tax bracket had their income taxes cut from 39.6 percent to 35 percent, only a 12 percent decrease. At the same time, the child tax credit was doubled, tax penalties for married couples were eliminated, capital gains and dividend taxes were cut to 15 percent, and the estate tax was reduced. Tax cuts have benefited the poor, middle-class, the rich, businesses and farms.

While the economy struggled through the first Bush term, the latest statistics have vindicated the Republicans. A robust economy has emerged after plowing through a continuous stream of setbacks, such as the collapse of the high-tech sector, the Sept. 11, 2001 attacks, wars in Iraq and Afghanistan, and Hurricane Katrina. By allowing individuals and businesses to keep more of their earnings, investment has skyrocketed, prompting steady economic expansion.

Unemployment is down from 6.3 percent in 2003 to 4.6 percent, with real wages rising faster than they have in five years. The stock market closed at its highest point ever last week. Tax revenue is up dramatically, with the federal government taking in $115 billion more than expected in 2006 alone. The deficit is $22 billion less than last year. All of these fiscal accomplishments are results of expanded production, increased hiring and renewed investment made possible by tax cuts.

As the Democrats engage in partisan demagoguery to paint Republicans as the party of big business and special interests, Democrats unfortunately have developed no tangible economic alternative. The House Democratic agenda speaks of instituting windfall profit taxes on oil companies, ignoring the reality that these profits are reinvested in exploration, development and alternative energies that hold the key to an energy-independent future.

Our own Democratic congresswoman, Tammy Baldwin, opposes a permanent elimination of the estate tax, which forces many small businesses and farms to be sold to pay the estate tax after the owner dies. The Democrats are running on an anti-Bush platform, not a pro-economy one. But an anti-Bush platform is no platform at all, and we should demand better.

Of course, the Republican Party probably deserves to lose power in one or both Houses of Congress after bungling the Iraq War, failing to unite over immigration, and its inarticulate and ineffective leadership. However, a change in Congress should not mean that the American people lose those things that the Republicans got right, and the tax cuts were most successful yet are highly vulnerable.

So when you vote, and I hope you do, do not simply heed the anti-Bush rhetoric espoused by flame-throwing partisans, but the numbers and realities of this economy. Vote for candidates who recognize the economic successes of the last few years, or lobby those who do not. The Democrats have chosen to posture themselves against this economic success, and we, as their constituents, can change this agenda. If we do not, we, like the Republicans, will lose this November.

Will Smith (wwsmith@wisc.edu) is a freshman majoring in political science and religious studies.

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Anonymous (October 17, 2006 @ 7:36am):

Mr. Smith, take off the rose-colored glasses. You're pleased that our republican congress and president have come up with a $250,000,000,000 budget deficit for 2006, which happens to follow a $400,000,000,000 deficit in 2005?

Wasn't the economy in the 1990's just as strong or even stronger with the Clinton-levels of tax? Didn't Clinton also come closer to balancing the budget than this administration ever has? Occasionally, didn't Clinton use line-item vetos to cut ridiculous ear-mark spending?

After 6 years of Republican-lead everything, why should we let them screw up 2 more years? What kind of politically blind American would be satisfied with the way our country has been managed? Will Smith, are you truly satisfied, or do you just believe everything that Coulter and O'Reilly tell you?

Oh, no! Pelosi and Kennedy will have so much power! Bush still has veto power, you idiot.

Welcome to America, where checks and balances will exist once more.

Anonymous (October 17, 2006 @ 8:47am):

The problem is that many pay little to nothing in income taxes. Then they think they have it made - not realizing that part of the price of every good or service they buy represents taxes. Many pay more into the ponzi scheme known as Social Security than income taxes.

No taxation without representation was the revolutionary battle-cry, but NO REPRESENTATION WITHOUT TAXATION is the battle-cry of the tax-payers in the struggle against the tax-eaters.

Anonymous (October 17, 2006 @ 11:43am):

"NO REPRESENTATION WITHOUT TAXATION"

What has the Republican congress done about that since 1994? Have they corrected the tax system, or has the evil CPA lobby stood in the mighty GOP's way.

No wonder why half the country thinks the GOP consists of a bunch of chumps; it's because they ARE a bunch of chumps.

Oh yeah, while you're working on things you still haven't done in 12 years, why don't you tackle Roe v. Wade like you said you would? Chumps, nothin' but chumps.

Anonymous (October 17, 2006 @ 12:12pm):

Nice article, Will. Democrats don't tend to understand the notion of government borrowing so you aren't likely to make headway with many of them. They should ask their econ professors what would happen to world capital markets we suddenly called all of our treasury notes.

Anonymous (October 17, 2006 @ 2:56pm):

Bush's tax cuts are good for the economy. You can't deny the numbers.

Anonymous (October 17, 2006 @ 3:08pm):

I'm really fed up with liberal economic policies. They think that taxing the crap out of everyone will make things better. They always talk about going after the rich to make them pay their share. Well it never worked that way. The rich will always figure out way to pass it on to the little guy. The rich never pay their own taxes. We pay their taxes for them.

There's only one way out of it: try something else that is NOT direct taxation. The FairTax is sitting in Congress waiting to be voted on. Liberals, however, can only try to scare us with horror stories about how bad a consumption tax would be. I don't want to hear what another liberal has to say about the FairTax unless they have a better idea. Until then they should shut up and stay out of the way.

Anonymous (October 17, 2006 @ 3:34pm):

That's right!
Finally, someone in Madison knows what they are talking about and is able to word their thoughts eloquently.
What a wonderful, knowledgable, well-thought article.
Kudos!

Anonymous (October 17, 2006 @ 6:32pm):

To start, the majority of taxes are paid by the lower classes, thanks to years of Reagan and Bushes. Taxes pay for the social services that the poor depend on because their two jobs still don't pay enough to live on. In a sense, taxes keep the work force alive that Walmart depends on. Taxes also support the laws and security that allows American companies flourish. Even economists agree that you can't have ZERO taxes.

If you really want no taxes, start by abolishing the state. No state = no taxes.

(A)

Anonymous (October 17, 2006 @ 8:14pm):

"To start, the majority of taxes are paid by the lower classes, thanks to years of Reagan and Bushes. "

Ummm, you should do a little research before you open your yap. The upper 50% of wage earners pay over 95% of the federal income taxes. As a matter of fact, the more they reduce the tax rates at the lower end, the larger portion of the tax burden is placed on the high end.

A great man once said something to the effect of, Once the majority of people are able to live off the sweat of the minority (in other words, once more people pay no taxes than pay taxes), a society is doomed. We are close... if the left had their way, there would be no taxes for anyone but the ambitious (or lucky).