Reaganomics (favor private sector capital formation over capital sapping taxation): Voodo? or “the Right Stuff”?
Reagan was ridiculed for reducing taxes (especially capital gains taxes) in his first term, but the results of his vision have ushered in an unprecedented period of progress and prosperity..
1.From 1981 - 1989 (Reagan years)-GDP in constant dollars grew by almost 1/3 rd.
2.DJI (after 16 years of no growth) grew 250% in value
3. Asset value of American households and businesses grew by $17 trillion.
Entrepreneurship flourished and new companies like Dell, Cisco, Sun, Microsoft and countless service suppliers emerged.
One of Reagan’s few backpedaling government meddling policy flaws occurred in 1981 with ERTA that raised some taxes and reduced some entrepreneurial incentives, but as bad as this intervention was it couldn’t stop the progress. The ball had been placed in motion and the economy was on a roll.
The inevitable recession in 1990 (like caterpillars, economies move in undulating waves - expansion followed by contraction) occurring under George H.W. Bush was undoubtedly exacerbated by his tax hikes (weakening the energizing results of the Reagan tax philosophy) but the technological revolution continued to push the world forward, lead by the USA..
Competitors and partners in global commerce such as Ireland, Hong Kong, the newly freed “Eastern Block,” Russia (flat tax) and China are all successfully advancing tax incentive (Reaganomic /supply side) models to grow their economies, and the world has prospered: Gross World Product per capita (in 2006 dollars) that had grown by $150 in 300 years (from $800 in 1500 to $950 in 1850), is now at $9,500 (10 times greater in less than 200 years). Most of this progress for the world’s people is attributable to innovation, capitalism, globalization and economic incentives. A notable factor in this increase has been the growth made possible by supply side economics..
George W. Bush’s tax policies and economic stimulus packages, using the same supply side economic concepts as Reagan, have produced remarkably good results. In the five years between September 11, 2001 and 2006 the GDP is $3 trillion higher, surpassing the entire size of China’s.
posted by John Rhein @ 10:50 AM
2 Comments:
I just sent in a letter to Donald Trump I wanted to share with you. There is a lt riding on the political campaign, and I am disturbed there are so many who I presume love our country as much as I do who seem oblivious to the stakes. Here goes.
Dear Mr. Trump:
You probably will never see this letter, but I have chosen to write it just to set the record straight, and hope your advisors will somehow get its message to you.
I’’m a free market capitalist and believe our country has disincentivised investing, by double taxation of dividends, taxing capital gains (a cynical way of turning off the venture capital spigot) and over burdening business with punishing regulations (2,300 pages of Dodd Frank and 26,000 pages to enforce it). However,there is a ray of hope -YOU.
But, I wish you would please stop your knee-jerk tendency to lash out with uncontrolled venom (not always the most effective use of your vocabulary) at those who slight you. There must be a more winning way of belittling them. I was wisely advised by my father to, “Never roll with a pig in the mud. You’ll get dirty and the pig will like it”
Take the spotlight off yourself and put it on un-vetted emigrants, multiple illegal voter registration, free speech repression, negative growth economics, cronyism, financial dealing with states using sharia law to subjugate women, extorting huge sums for little speeches, getting the foundation to pay personal bills, trail of disastrous foreign policies, sky rocketing cost of medical care, inept conduct of the war on terror, the nation’s suffering middle class, the overreach of the EPA, and the liberal activist Supreme Court. There are more open sores than a J&J Band Aid box can hold, and more scabs than can be picked in a year.
Also, I hope you’ll be extra careful with your negotiation of new foreign trade deals so that they won’t result in WW III. There is ample evidence (witness the Smoot Hawley Tarif Act) that trade wars offer a one way ticket to disaster. We can’t afford another.
And please do me a favor. Why do you supposes Goldman Sacks and so many billionaires are lining up for Hillary? Is it possible they know she can be bought? I can think of no other explanation for trading capitalism for socialism (which has been proven to never work). They got theirs (wealth) and now we’ll get ours (serfdom). Perhaps you can offer some other reasonable explanation.
I advised my wife to ignore our gush of direct mail appeals. The volume of such appeals has become insufferable, and our pocket isn’t deep enough to give the support we’d like to offer. However, she wants you to be our next president so badly she couldn’t resist sending you something. As you can see, I have crossed out her initial offering of $25 which was in response to my suggestion of nothing, and replaced it with $200 because I see you as the last hope for our wonderful country- You get things done and you seem to understand what has made this the country we love.
Good luck and God’s speed.
Your friend,
John Rhein
P.S. My wife Phyllis has approved this message.
How to get America back the fast track
John Rhein's laundry lis for growth and prosperity:
1.The best way to create jobs and reduce the nation’s unemployment rate.
Eliminate the minimum wage (or make it a state issue)
Uncomplicate business procedures (red tape, interfering agencies, lengthy confusing regulations)
Create enterprise zones
Rescind Dodd Frank
Educate those who can be taught to do new work and assist in finding employment with a public private initiative
Reduce the the duration of unemployment benefit (consider a payback when there is enough income to do it)
Provide transportation and cost-of-living allowances no interest loans to job seekers (to be paid back when possible)
Reducing or eliminating capital gains tax for venture capital providers
Zero-base budget all bureaus and eliminate through merger bureaus that are performing redundant functions
2. Health care is too expensive. The Obama care health care law should be either eliminated or radically changed.
Ben Carson and others have worked up plans that could assure more effective and efficient healthcare
3. Insist upon a balanced budget before any money is forthcoming. Revise the OBM forecasting template to be more realistic.
Reduce capital gains taxes to maximum of 5% or eliminate them
Reduce size of government- (eliminate redundancy, merge or eliminate unneeded agencies, simplify dismissals)
Reduce the corporate tax on overseas profits so that they can have an incentive to repatriate their gains.
4. Control the borders, fight radical Islam, strengthen alliances (back up our word), put accountable smart people in
leadership positions, work out more business friendly immigration policies
Give an incentive for foreign students to stay in this country and fill good jobs that require their expertise.
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