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Take this interview seriously. And don’t think Senator Schumer is an idiot. The Republicans should be mocked for not focusing on the spending side and for the real tax problems – which lie outside the federal income tax. But … well … you fill in the blanks.

2 Responses to “My Advice to Republicans”

  1. Harry says:

    Everybody talks about 1986 as if the big tax revolution came in 1986, but came five years earlier, and I am not talking about social security or TEFRA. Top rates were cut to 28%, but were phased in over three years, so there was much income deferral that delayed reporting of some income. There also was much deregulation — not enough — but significantly in energy.

    At the time, there was much fear among economists that the economy would grow too rapidly, refueling inflation — these folks known as the “three percenters” who worshipped the Phillips Curve.

    What happened was a deep recession ended, I believe in August 1982; crude oil prices dropped like a stone; and we had growth everywhere. Then we had tax reform in 1986, which did change the game a bit — for example, revising the rules for accelerated depreciation for certain capital equipment, and raising the top marginal rate to 32%, a 14% increase.

    Ever since Reagan, the rate reduction has eaten at Democrats, who have refused to concede any economic benefit from it. When Clinton got elected, one of the first things was to bump the top rate to 39%, and do a Laura Tyson stimulus despite the fact that the recession had ended a year earlier. It took him two more years to think about reforming welfare and lowering capital gains taxes, which today some Democrats want to be higher than under Reagan. Mr. Schumer also wants to tax foreign subsidiaries of U.S. corporations, have special excess profits taxes on Exxon, and wants a national value-added tax like our European brethren. Tax ’em for the mice, tax ’em for the lice, tax ’em for looking in the mirror twice. But never blame Fannie Mae.

    Senator Schumer is not an idiot; he scored 800 on his college boards back before they made it easier, as we all know. But as Hayek would point out, we all have our limitations.

    Therefore, it behooves the next administration to be humble as it tries to make a better world. I would settle for anything that promotes growth, which should reduce what we have to spend on unemployment compensation, food stamps, and Medicaid, to name a few big line items.

  2. Brent says:

    And I believe the tax code should only be about revenue for the government, and that is it. If it is about revenue when the Republicans have power, then it will be about revenue when the Democrats have it. I would hope it would prove to promote less boom and bust cycles.

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