So If Obama's Bottom-Up Redistribution Tax Plan Is Right, Then Kennedy and Reagan Must Have Been Wrong???

In remarks made on the campaign trail yesterday, according to Senator Obama, his redistributive tax policies are based upon a belief that, "That is how we have always grown the economy, from the bottom up". The problem that I have, however, is simple: History just doesn't support that statement.

So my challenge today is simple: Name me a time in which our economy has ever grown from the bottom up?

Now just as a reminder, remember this: In order for even lifelong Democrat's to believe that Senator Obama's tax proposals are the right move, then you would also have to prescribe to the belief that Herbert Hoover and Lyndon Johnson were correct; and subsequently that John F. Kennedy and Ronald Reagan were wrong.

When the progressive tax was instituted in 1913 at a 1%-7% rate and the effects of the tax were never known as US industry was soon mass producing war materials. The top marginal rates quickly rose during the war, with a promise by Wilson that they would return to lower levels after the end of the war.

Between the wars we saw the wartime rate slowly lowered to 25%. In early 1932, facing a deepening 2 year recession, Hoover raised tax rates up to 63%; 1932 would become the worst year in terms of the rise in unemployment and loss of GNP/GDP; that year the nation would fall into a technical depression. Roosevelt would not raises taxes again until the end of 1936 and once again unemployment would dramatically rise in the following 24 months before settling into a 19% unemployment rate on the eve of WWII. Despite rising federal tax revenues throughout the 30's and ever-increasing deficits, by the onset of WWII and the "War Economy", they had no measurable positive effect on the economy.

Taxes would be raised during WWII and then again at the end of the War to help slow US economic growth and assist in the rebuilding effort.

In the early 60's, President Kennedy would embark on a campaign to bring "tax fairness", his words, back to our economy. In Kennedy's own words, "It will be a major aim of our tax reform program to reverse this process, by broadening the tax base and reconsidering the rate structure. The result should be a tax system that is more equitable, more efficient and more conducive to economic growth."

Kennedy would go on to state, "The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system — and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.

I'm not talking about a "quickie" or a temporary tax cut, which would be more appropriate if a recession were imminent. Nor am I talking about giving the economy a mere shot in the arm, to ease some temporary complaint. I am talking about the accumulated evidence of the last five years that our present tax system, developed as it was, in good part, during World War II to restrain growth, exerts too heavy a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking. In short, to increase demand and lift the economy, the federal government's most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures...

For all these reasons, next year's tax bill should reduce personal as well as corporate income taxes: for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital."

In speech after speech on taxes, Kennedy would promote what he referred to as his "TOP-to-BOTTOM" approach to tax fairness. Congress would eventually pass Kennedy's tax-cut in 1964 after his death, but the cuts were less than Kennedy had originally proposed.

In 1968, Lyndon Johnson would reverse the economic policies of Kennedy and raise taxes in his final year in office. The economy would soon enter into the 1970's which would become a period of rising inflation and no economic growth.

Following his election in 1980, Reagan would revive the "Top-to-Bottom" approach sought by Kennedy 20 years earlier. The Reagan tax cuts would be based upon the across the board tax-cut proposals of Kennedy.

The reality of history tells us that in no period since the birth of this nation has economic growth ever occurred from the bottom-up. The industrial revolution was fully financed by the wealthy of the age, the Rockefeller's, Carnegie's, Morgan's and others. They profited dearly, but more importantly laid the basis for what would become the modern economic structure.

Today, Senator Obama wants to talk about a revival of bottom-up economics, but to what period of time is this revival tied too. The last time I checked, Americans hold President's such as Kennedy and Reagan in high regard, with little regard to Johnson or Hoover. Are we now to revise history, to believe that Hoover and Johnson were right.

Senator Obama has stated that he merely wants to return tax rates back to the rates in place during the Clinton Administration. Yet, that's not accurate. The only rates that Senator Obama wants to revert are the rates at the top of the scale, while maintaining and expanding the bottom-level tax cuts provided by the Bush Administration. The result would be a tax system with a shrinking tax base, the very system that President Kennedy fought against.

Senator Obama also wants to take the system one step further, by not only providing tax cuts that would lead to more Americans not paying taxes, but would also provide "credits" to the nearly 40% of Americans who do not currently pay taxes. That is not a return to the Clinton years and it is not a return to any previous Presidential Era in this nation's history.

So my questions still stands...Name me a time when our economy ever grew from the bottom up?

Were Kennedy and Reagan wrong?

Were Hoover and Johnson right?

Name me a single President who ever proposed direct redistribution of wealth? (p.s. a U.S. President)

J Brown
October 28th, 2008
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