Ralph Benko has a timely piece today at Forbes.com:
According to the report of one Kemp insider, Reagan, on the verge of his presidential campaign, came to seek Kemp’s endorsement. The Reagan campaign’s purpose was to prevent Kemp from entering the race too, splitting the conservative base. Jack Kemp offered his endorsement in return for Reagan’s endorsement of the Kemp-Roth 30% across-the-board tax rate cut.
That policy was controversial among both Republicans and Democrats. It was famously attacked by Reagan’s chief rival for the 1980 presidential nomination, George H.W. Bush, as “voodoo economic policy.” Reagan, on the advice of his then-top advisors, reportedly intended to check Kemp’s box, pocket Kemp’s endorsement, and never mention the tax rate cut again.
Until, that is, President Carter attacked Reagan’s endorsement of Kemp-Roth as irresponsible. Reagan rose to its defense. Carter doubled down. So did Reagan.
And Dan Mitchell for the win!
Our friend, Senator Pat Toomey of Pennsylvania discussed tax reform, including SALT deducations, with John Catsimatidis on The Cats Roundtable. Listen to the discussion here (less than 10 minutes long).
A good tax reform read at Forbes.com, not specific to supply-side by any mention, but myth-busting is important too:
Our friend Jerry Bowyer today recalled a 2013 interview he had done with Allan Meltzer back in 2013. After the passing of Mr. Meltzer earlier this week this seemed like another good one to share. Enjoy.
Economist Allan Meltzer, who died Monday, was widely considered one of the postwar era’s greatest monetary economists and the only economist to advise both President Reagan and British Prime Minister Margaret Thatcher.
☕ Ralph Benko’s latest for Forbes.com addresses the chaos in the West Wing and how that relates to (or not) economic growth:
But only Trump has the power to really work this out, by directing his advisors — all of them — to start focusing on the right question. How to engineer a 3% – 4% economic growth rate? Getting there is not a mulligan.
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The clashing of White House camps is an inevitable artifact of sluggish growth. All President Trump needs to do to bring about a just and lasting West Wing peace is to focus his team better. The way of producing harmony in the West Wing — and popularity in the polls — is for the President to issue a sticky note to each of his economic and political advisors that says, simply “How do we get real economic growth up from 2% to 3% or 4%, and fast?” Trump, alone, has the power to do this.
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Getting growth is an empirical, not an ideological, thing.
Worked for JFK. Worked for Reagan. Worked for Clinton.
Would work for Trump.
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Reagan supported Chairman Volcker’s wringing inflation from the economy. When that was accomplished, and Reagan’s across-the board tax rate cut was fully phased in, America enjoyed a cumulative 3.5+% economic growth rate with a spectacular 7% year. Mr. President? That was huge.
☕ Dan Mitchell also has a new post that while not strictly economic, does matter in the economic realm. As we know, money taxed away from the people is money taken out of the consumer economy.
☕ If you can get to Dallas on May 9th…
☕ 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.
☕ You might also enjoy this:
Brian Domitrovic has a new column at Forbes.com:
If all money, or at least a good part of it, in the world, were credible money, the United States would not be in its strange current position of outsourcing production of regular goods and services so that we can produce the world’s money. If the U.S. led the world into an international gold standard, that is, we would develop a very different profile of economic activity in our own country—very much including more manufacturing.
Even we supply-siders can concede one thing. If Congress and the president would set up a low, flat sales tax on all goods, foreign and domestic, in exchange for a repeal of the 16th amendment to the Constitution that establishes the income tax, we would see an improvement in economic efficiency and growth. And if Congress and the president did this concurrent with a definition of the dollar in gold (a move that is ultra-Constitutional), we might stand to reclaim our good economic old days of yore.
Mark A. Weinberger makes the case for tax reform in clear terms in this well wirtten guest column for Forbes.com:
To be successful, business leaders must be willing to push beyond our own parochial interests. We know tax reform must be fiscally responsible. That means tax cuts must be accompanied with reductions in existing tax incentives. A pro-growth American tax system that attracts capital from all over the world and responds to the needs of U.S. workers will be much more beneficial than one riddled with targeted benefits and historical incentives.
It is encouraging that Congress and the Administration are making serious efforts to move legislation that will upgrade our outdated tax system. With its competitive business tax rates and territorial-like international tax rules, the House leadership’s Tax Reform Blueprint incorporates key pro-growth provisions. However, there are significant differences over issues like border adjustment taxes and the elimination of interest deductibility. These issues will have to be resolved.
The problems of America’s outdated business tax system are well known, starting with the burden of having the highest corporate tax rate among industrialized countries. The U.S. rate of 38.9 percent compares poorly to the average 24.2 percent rate of the member countries in the Organization for Economic Cooperation and Development (OECD).