☕ Brian Domitrovic weighs in on tax cuts…on tax day. His latest at Forbes.com:
The recession of 1990-91, foretold by the flash crash in the markets that spooky Friday the 13th in October 1989, remains one of the great oddities of our recent economic history. The 1982-2000 boom was so immense—it resulted in 40 million new jobs, untold number of startups, and a renewed exploration of the American Dream—why did it have even that one interruption, there in the years of President George H.W. Bush?
The reasons are all too relevant to contemporary affairs, namely the matter at hand this spring before the Donald J. Trump administration: should there be a tax reform involving a major cut in tax rates, as roundly promised on the campaign trail?
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In the 1988 presidential campaign, Bush uttered the most (in)famous words of his career: “read my lips, no new taxes.” That was his negative program, no new taxes, as he sought to succeed Ronald Reagan in office. Bush’s positive program was to seek a cut in capital-gains rates.
Capital gains rates had gone up by eight points in 1986, as part of a deal to get the marginal rate of the income tax all the way down to 28 percent—the lowest top rate in the modern history of the income tax. Bush argued, on the trail in 1988, that capital gains rates do not take into account inflation (as the income tax does), and had to be lowered as the top fiscal priority of his administration.
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