Thursday, June 1, 2017

Oklahoma Needs A 'Kennedy' Economic Plan

  Oklahoma's state government is adrift without a vision, a plan, or even a set of principles. We're blessed with natural resources and grateful for folks who came to pump it out of the ground & refine it.  Texas has those same resources, but they also have a massive industrial and technology muscle.
  Texas isn't paying money for corporations to move there. Texas is saying; "Come here to make money, and we'll not confiscate it from you OR your workforce.".
  See, Texas has no income tax. Yes, they have a significant property & sales tax.  But the young family who's starting out will get ahead much faster in Texas.
  California tech companies are moving to Texas. they understand the failure of the California model and they're getting out of 'Silicon Valley'.

A Kennedy Plan

John Kennedy grew up in the home of a global businessman. He understood the dynamic effect of government taxation. He also knew how to peel off layers of oppressive taxation.  It doesn't appear that any Oklahoma leaders have a prescription for the kind of growth that Kennedy brought to the 60s, or Reagan brought to the 80s.
Even the liberal media can't discredit the Kennedy success of cutting tax rates in order to collect more revenue. Here's an article from Marilyn Geewax, which appeared on the NPR website:
​In 1962, speaking at the Economic Club of New York, Kennedy said he was committed to "an across-the-board, top-to-bottom cut in personal and corporate income taxes." The tax system, mostly designed during World War II, "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," he said.

Many lawmakers worried that reducing taxes without cutting spending would create unacceptable budget deficits. But Kennedy, who famously noted that "a rising tide lifts all boats," insisted tax cuts would generate broad-based growth.

Congress finally approved the tax cuts in early 1964, three months after Kennedy's assassination. The following fiscal year, the federal budget deficit did indeed shrink. Stock investors loved it. Between 1962 and 1966, the Dow Jones industrial average nearly doubled.

To this day, conservatives point to that robust period as evidence that cutting taxes will lead to higher revenues.

But liberals say conservatives' interpretation is misleading because conditions were so different in the early 1960s, when the top marginal tax rate was 91 percent. The Kennedy-backed tax cuts took down that rate to 70 percent. Today, the highest rate is 39.6 percent. Cutting the top tax bracket now would not have the same impact because it already has been lowered several times, the argument goes.

"You can only go to the well so many times before you lose effectiveness," says David Shreve, an economic historian who has written about the Kennedy-era tax cuts.

Shreve says there's another factor conservatives overlook: Kennedy's biggest tax cuts were aimed at average wage earners in hopes they would spend more. Boosting the demand side of the economy "gave us the widest prosperity and longest unbroken run of growth in history" up to then.

In contrast, conservatives focus on "supply-side" cuts, which target the marginal tax rates for wealthier individuals. The goal is to encourage them to invest more and expand output.

So for the half century ever since, liberals and conservatives have been debating the lessons of the Kennedy-backed tax cuts. But Allen Matusow, author of The Unraveling of America: A History of Liberalism in the 1960s, says this much is clear: The cuts were game changers. Marginal tax rates never returned to the very high levels of the early 1960s, he says.

"These were permanent tax cuts," Matusow says.

Kennedy also fought inflation. In 1962, he directed Labor Secretary Arthur Goldberg to mediate negotiations for a steel-industry labor contract. In the end, the steelworkers union agreed not to strike, even though workers would get no raises that year.

Kennedy praised the "obviously non-inflationary" contract, as well as the negotiators who demonstrated "industrial statesmanship of the highest order."

Then, days later, U.S. Steel CEO Roger Blough announced an immediate 3.5 percent steel price hike. Other companies followed suit. An enraged Kennedy condemned the "irresponsible" businessmen who had shown "utter contempt" for their country.

The companies rolled back the price hikes. And throughout the Kennedy years, inflation remained stable and low.
Read the full article at NPR.

from Sooner - Editorial

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