The Colorado Springs Gazette: Pence pitches tax reform in Colorado
Vice President Mike Pence addressed Colorado Republicans on Thursday to pitch a commonsense message about economics: Lower taxes will unleash our economy, and enable growth that should help everyone.
The Republican-controlled Congress generally agrees with President Donald Trump’s vision for major tax reform, but does not have a detailed bill anyone can scrutinize. That needs to change, soon. For now, we know a few general parameters:
– No federal taxes on a family’s first $24,000 of income
– Expansion of the child tax credit
– Elimination of the death tax
– A simplified code, which Pence says will “eliminate special deals for special interests, and cut the hand-outs, carve-outs and loopholes that benefit the lucky few at everyone else’s expense
– Cut the corporate tax rate from 35 percent to 20 percent
– Cut “pass-through” taxes for small businesses to the lowest rate since 1931
– Reduce taxes on trillions of American dollars companies keep overseas, to bring them back home
Pence claims 900,000 Coloradans will pay no income taxes because of the $24,000 standard exemption, combined with the child tax credit and other measures.
The Trump administration believes tax cuts for businesses will boost a typical worker’s wage by $4,000.
What comes out of the Washington may not resemble the vision championed by Trump and Pence. With any major tax revision, the details are everything.
We only know this: Government cannot tax its way out of a $20.4 trillion debt that is growing at an alarming rate. Our only hope is vigorous, long-term economic growth of 4 percent or more.
We don’t need to speculate about the possibility of tax cuts fueling growth. Just look to the 20th century.
When President John F. Kennedy took office, recessions were the norm. The country was in recession in 1949-50, 1953-54, 1958 and 1960-61.
A 2016 article in Time magazine explains how Kennedy, immediately after election in 1960, convened a “task force” of Keynesian economic professors from top universities. Their recommendation for overcoming economic stagnation included more government spending on new post offices, hospitals, veteran’s benefits, national parks funding and more.
The plan didn’t work, and Kennedy decided to try something else after hearing complaints from business leaders about the “Kennedy Market.” Accepting new advice, Kennedy proposed massive income tax cuts.
Kennedy sold the House of Representatives on a tax cut bill in the summer of 1963. The Senate was considering it when an assassin killed Kennedy that November. The Senate embraced the plan as a memorial to Kennedy, and President Lyndon Johnson signed it into law.
“The nation embarked upon an eight-and-a-half year, uninterrupted run of growth at just over 5% per year,” explains the Time article.
Presidents Richard Nixon, Jimmy Carter and Gerald Ford reversed course and raised taxes. The 1970s was a decade of sustained economic stagnation and runaway inflation.
Enter President Ronald Reagan, who credited Kennedy for inspiring a major tax cut he proposed as his first order of business in 1981. A failed assassination helped push the bill through Congress, and long-term results were nearly identical to those initiated by Kennedy’s tax reform. That led to more tax cuts in Reagan’s second term.
“The major tax-rate cut of 1986, which took the top income tax rate down to a five-decade low of 28%, passed the Senate 97-3, as the nation enjoyed a long run of growth comfortably over 4% per year,” Time explained.
Tax cuts fund economic growth, which is the only source of revenue from which governments can provide for the national defense, pay down debts and fund the social safety network.
Love or loathe our bombastic president, all Americans should champion tax policies that empower individuals and businesses to produce and spend. Let’s hope we get tax reforms like those that fueled widespread success in the ’70s and ’80s.

