"Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues."
—President John F. Kennedy,
Economic Report of the President,
Arthur Laffer, the brilliant economist and creator of the "Laffer Curve", has an excellent editorial in The Wall Street Journal today that defends the philosophy behind President Kennedy's quotation,which worked to improve federal receipts into the national treasury while further improving the national economy. He further explains why it would be extremely detrimental to our economy to allow the Bush tax cuts to expire and then go and raise taxes even higher still on the rich.
Economics and history has proven, particularly throughout the 20th century, that each time significant tax rate reductions were implemented, especially for the rich, the result was a very stimulative effect on the economy that translated into that "rising tide that lifts all boats". Tax receipts to the treasury are actually increased when this is done properly. What was not always done in conjunction was a drastic cut in federal spending. THAT is the key to what is critically important to saving our country from economic collapse today.
Those progressives that find their need to punish the rich do so at the greatest expense to the poor and those struggling to make ends meet in the middle class. Is retribution for perceived greed really something that should trump good economic policy that ultimately improves life for all Americans?
Read Mr. Laffer's article on the subject here.