In 1982, President Ronald Reagan predicted that tax cuts would motivate Americans to save and invest money, thus bolstering the economy. He had seen it done in a previous administration, with a most positive result.
In 1961-1962, John F. Kennedy proposed a two-year, across-the-board income tax cut. After it was approved by Congress, the rate of personal savings, from workers’ earnings, went up several percentage points. The employment rate and the GNP rose dramatically.
For Reagan, however, the transition wasn’t easy. There was skepticism and a tax increase. Congress approved the plan, but only gradually and incrementally over a period of three years. However, toward the end of the third year it began to pick up social and economic momentum.
Tax rates lowered from 70 percent to 50 percent, while capital gains tax dropped from 28 to 20 percent. As a result of this plan and regulation reduction, industry produced millions of new jobs as the GNP rose. The labor to produce a gallon of milk was only half of what it cost in 1950, and the cost of labor to produce a gallon of gasoline had fallen by two-thirds. In short, the standard of living rose and the cost of living went down.
My point? If John and Ron could do it, Don and Congress can now!
