KAI RYSSDAL: Congress made a deal on a 2008 budget plan this week. Or maybe it’s more accurate to say Democrats in Congress did, because a key part of the package is letting President Bush’s tax cuts expire. That’s much to the consternation of conservatives, who say the economic growth over the past five years or so is because of those tax cuts.
Commentator Stephen Moore points out that’s an idea Ronald Reagan made popular 25 long years ago.
STEVE MOORE: Reaganomics is now officially dead in Washington. House Ways and Means Committee chairman Charlie Rangel killed it. He’s writing a tax bill that would raise federal tax rates to their highest level in 30 years.
The top income-tax rate could go from 35 to 45 percent next year. The capital gains tax rate would double under this plan.
Presidential candidates Barack Obama and John Edwards both openly boast of their willingness to raise tax rates on the richest 1 percent. Why? Because the rich can afford it, they say.
But are these politicians paying any attention to tax collections? The Treasury Department just announced that April tax receipts were higher than in any other month in history — up 11 percent from the same time last year. The richest 1 percent of Americans now pay 35 percent of all income taxes, the largest share in our nation’s history.
More than half of the tax filers in the highest tax bracket are small-business owners, according to the nonpartisan Tax Foundation. Does anyone really believe raising their taxes will create more jobs? It reminds me of the adage: Liberals love jobs, but they hate employers.
Here’s what’s worrisome: Overnight, the U.S. could go from one of the lowest tax nations in the world to one of the highest.
The House tax plan could out-do even socialist France — which, after their recent elections, is looking to cut taxes, attract investment and grow the economy.
The idea that lower tax rates spur growth and raise living standards is the modern economic operating system around the world today. Fast-growing China, India and Ireland have all chopped taxes to lure foreign investment. Russia has a 13 percent flat tax today.
So regrettably, Reaganomics may be dead in America. But the spirit of the Gipper is very much alive on most of the rest of the globe.
RYSSDAL: Stephen Moore is a member of editorial board at The Wall Street Journal.
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