Today is April 18th folks, and I'm supposed to lead by saying "Happy Tax Day." Well, not exactly.
You could say "Happy Passover." You could say "Happy Easter," but you can't really say "Happy Tax Day." Tax Day is already bad and President Joe Biden wants to make it worse.
The IRS is already bad and no matter how many more tens of billions of dollars we give them and tens of thousands of tax-collecting agents they hire every year, the story gets worse and worse.
As of March, the IRS hadn't processed more than 12 million returns. The latest appropriations bill gave them funding to hire an additional 10,000 people but that's not going to work.
53% of all IRS employees work from home full-time because of union work rules. So much for hands-on helping taxpayers and they want better computers. They always want better computers, but that never works either.
Joe Biden wanted to give them another $80 billion and hire another 87,000 agents but we've tried that so many times as IRS people chase waitresses around the table to tax their tips, run up and down city streets to make sure there's no uber hanky-panky, and in their spare time go after successful small business and gig workers. Kind of pathetic, don't you think?
Meanwhile, Joe Biden wants America to be number one in taxes—what a terrific goal that is. If he had his way, the U.S. would have the highest individual, corporate and capital gains taxes of all the OECD developed countries and here's something Joe can be proud of—we would have higher tax rates than China! Not good.
And don't forget Biden's proposed confiscatory wealth tax on unrealized capital gains, which would be unconstitutional, impossible to calculate, in addition to being stupid. Of course, the Bidens never acknowledge that U.S. tax revenues are setting new records month after month.
In the last 6 months, total tax revenues increased by a whopping $2.1 trillion—the first time in history that tax collections exceeded over $2 trillion in a 6-month period.
You would think with a revenue surplus like this, Biden would return the money to the working folks who earned it in the first place. It is, after all, the people's money, but not a chance. He wants to use it for another mighty expansion of his big government socialist regulatory state to control all aspects of the economy.
Instead of rewarding success, the Bidens want to punish it. They have no interest in economic growth. For them tax policy is strictly a matter of class warfare and redistributionism.
They'll never realize by taxing successful businesses and entrepreneurs they reduce profits, which in turn reduces middle-class blue collar-type wages, increases consumer prices and throttles investor returns.
The left is always trying to tax the rich without realizing that you can't be in favor of employees if you're opposed to employers or you can't support a system of capitalism without capital. That's why socialist models always break down.
Now, because I’m such a fair-minded person I don't want you to think that all Democrats are always wrong about tax policy. There's one Democrat who got it completely right almost 60 years ago. His name was John F. Kennedy. Let me quote from his speech to the economics club of New York in 1962.
"Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenue to balance our budget just as it will never produce enough jobs or enough profits. In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. "
JFK had it exactly right. He was describing the Laffer Curve even before there was a Laffer Curve and Kennedy was for growth and really growth should be the most important goal for tax policy. Kennedy took the top rate from 91% to 70%.
Years later, former Democrat Ronald Reagan took the top rate from 70% to 28%. In fact, when Reagan left Washington, we had a two-bracket income tax—28% and 15%. 10,000 pages of tax regulations were ripped out of the federal register.
As tax rates were lowered, the tax base was broadened, and tax simplification was achieved. The JFK tax cuts launched a decade of tremendous prosperity. The Reagan tax cuts launched a two-decade prosperity cycle.
The Trump tax cuts, which are still in place today because we saved America and killed the bill, are really the only reason for what limited prosperity we actually have. They should be made permanent.
By the way, if you like my JFK-Reagan tax-cutting story, the title of the book is "JFK and the Reagan Revolution." One click on Amazon, just saying.
Finally, a pro-growth tax cut plan which would flatten rates, broaden the base and simplify the code could generate the kind of 3-4% economic growth that would be a crucial element in a balanced budget world that also emphasized a domestic discretionary spending freeze and a rollback of all the nutty Biden regulations, especially on fossil fuels. That would be a growth budget.
Here's a factoid: over the roughly 50 years between the end of World War II and the year 2000, the U.S. economy grew 3.6% at an annual rate. Believe it or not, that was 1947 to 2000, but unfortunately in the new century from 2000 to 2021 the economy has grown by only half of the post-war period—1.8% annually.
Too much spending, too much deficit finance, too much money printing, too much inflation, too many regulations, too much central planning, too much big government socialism. We don't have to have it this way. America deserves better. America can do better as it has proved in the past.
But you know what? Americans know this. That's why we saved America and killed the bill.
And you know what else, folks? The cavalry is coming.
This article is adapted from Larry Kudlow's opening commentary on the April 18, 2022, edition of "Kudlow."