Will Taxing the Wealthy Bring Back Prosperity?

"If wealthy individuals are willing to simply go back to the rates that existed back in the 1990s," President Obama recently said, "then we can solve this problem... "It does not take a lot.”

So is that all it will take to bring our Country back to prosperity?  Is it really that easy?  Well, yes and no.  President Obama has to know that simply going back to the rates as they were in the 1990’s will not create prosperity.  “Clinton signed his tax hike into law in September 1993, the same year he took office. It included an increase of the top marginal tax rate from 31 percent to 39.6 percent; repeal of the cap on the 2.9 percent Medicare tax, applying it to every dollar of income instead of capping it to levels of income like the Social Security tax; a 4.3 cent increase in the gas tax; an increase in the taxable portion of Social Security benefits; and a hike of the corporate income tax rate from 34 percent to 35 percent, among other tax increases.” (Source: US. Department of the Treasury, Office of Tax Analysis, “Revenue Effects of Major Tax Bills,” September 2006)

So did the Economy boom after the Clinton tax increases as Obama suggests?  No, but we know what Clinton and other Presidents did to created prosperity.  Clinton’s economic boom didn’t happen until 1997 after welfare reform, and especially after the capital gains tax rate reduction.  As Democratic President John Kennedy said, and the Democrats used to know: “An Economy Hampered by restrictive tax rates will never produce enough jobs or enough profits”.

President Obama's statement when he was a candidate in 2008 discussing the capital gains tax rate shows us why he will never look back to find the real causes of the Clinton boom.  After Candidate Obama was told in recent decades a reduction in capital gains tax rate caused an increase in capital gains tax revenue, Obama was asked why those rates should be raised.  He responded by saying he "would look at raising the capital gains tax for purposes of fairness." 

 

Raising taxes is not fair, nor will it bring back Prosperity.  We have never taxed our way to prosperity.  If President Obama truly wants to bring back prosperity he should reign in spending, cut regulations and lower taxes to create economic growth, more jobs and more tax revenues.  Presidents from both parties have done this in the past and it worked every time it was tried.  If President Obama truly wants to bring back Prosperity he would try it again!