Larry Kudlow: Obama Should Cut Taxes Like JFK, Reagan

Image: Larry Kudlow: Obama Should Cut Taxes Like JFK, Reagan

Wednesday, 05 Mar 2014 09:07 AM

By Drew MacKenzie

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Economist Larry Kudlow has denounced President Barack Obama for failing to follow the examples of former Presidents John F. Kennedy and Ronald Reagan who cut taxes to get the economy rolling again.

In a commentary he co-authored in The Wall Street Journal, the host of CNBC’s "The Kudlow Report" criticized Obama for spending staggering amounts of government funds in a disastrous attempt to jump-start the economy.

"It is a pity that President Obama, who has unsuccessfully tried massive infusions of government money to spur growth, didn't follow JFK and Reagan's lead and make lower marginal tax rates a priority," wrote Kudlow and Brian Domitrovic, chairman of the history department at Sam Houston State University.

"If he had, we'd likely be in the midst of a vigorous recovery and on our way to another decade of impressive growth," they wrote in The Journal.

Kudlow and Domitrovic, who are writing a book on Kennedy’s tax cuts to be published by Penguin next year, hailed the sweeping tax reforms President Lyndon B. Johnson signed into law 50 years ago that had been championed by JFK before his assassination.

The 1964 law reduced the top tax bracket from 91 percent to 70 percent and the bottom bracket to 14 percent from 20 percent, while the 22 rates in between were also slashed.

"JFK understood that high tax rates, even on the rich, bring inequities into the nation's political economy that do not befit America's traditions of liberty and constitutional rule," said Kudlow and Domitrovic.

"He also understood that devaluing tax preferences, as tax cuts do, frees up capital to move to its most naturally productive purpose and spur economic growth."

Under the Tax Reform Act in 1986 during Regan’s administration, the top marginal tax rate was just 28 percent. The highest marginal tax rate is now 39.6 percent.

"Reagan had the good sense to use the JFK tax cut as a model for his own historic tax cut in 1981," said Domitrovic and Kudlow, who was associate director for economics and planning in the Office of Management and Budget in the Reagan administration.

The authors also praised the initial tax reforms that took place in the 1920s under the Warren Harding and Calvin Coolidge administrations.

"The 1920s, '60s and '80s were three of America's greatest decades of economic growth," they wrote in the Journal. "Without them, growth since the inauguration of the income tax in 1913 averages less than 3 percent per year.

"Each of the tax-cut decades saw at least seven years of growth of 4-5 percent, along with advances in entrepreneurship, employment, living standards, and wealth. We would hardly speak of an 'American century' if not for the economic expansions that came with these three historic tax cuts."

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