Former President Donald Trump will address the Economic Club of New York on Thursday, where he is expected to detail his pro-growth economic agenda for a second term.
In 1962, Democratic President John F. Kennedy gave a powerful address to the same organization, making the case for tax cuts, which he argued would lead to more economic growth and ultimately more federal revenue, which is what happened.
Meanwhile, current Democratic presidential nominee Vice President Kamala Harris is proposing tax increases, even as the economy experiences sluggish growth and the government unsustainable annual deficits.
Former Trump administration top economic advisor Larry Kudlow discussed Trump’s upcoming Economic Club address on his Fox Business program Tuesday.
“His key point, I believe, is going to be expand on the urgent need for more rapid supply-driven economic growth for middle America, for young people, for minorities, to help all of them climb the ladder of success,” he said.
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Kudlow showed a clip from Trump’s speech in Johnstown, Pennsylvania, on Friday, when the former president said, “Together we will deliver low taxes, low regulations, low energy costs, low interest rates, low inflation, so that everyone can afford groceries, a car and a home.”
PRESIDENT TRUMP: “Together, we will deliver low taxes, low regulations, low energy costs, low interest rates, and low inflation so that everyone can afford groceries, a car, and a home. We will stop the invasion, end migrant crime, support our police, strengthen our military,… pic.twitter.com/umxqy3ip7C
— Trump War Room (@TrumpWarRoom) August 30, 2024
Kudlow contended Trump’s plan to lower oil costs alone will have a ripple effect throughout the economy, because high fuel prices show up in almost everything Americans buy.
He noted oil production in the U.S. just recently reached the same level it was under Trump in 2019, because the Biden administration has greatly restricted exploration on federal lands and offshore. The need is greater now than in 2019, because the population is millions more.
“Expect Mr. Trump to sharply criticize Kamala Harris’s plan for price controls, rent controls, her extravagant new spending on housing that’s going to jack up home prices even more, or her myriad welfare-related policies that essentially pay people not to work and would cost another $2 trillion,” Kudlow said.
“That would break the budget more than it has already been broken,” he added.
Further, Kudlow predicted that Harris’s plans to raise taxes on businesses and individuals would greatly hurt the economy.
CNBC reported that the vice president proposed on Wednesday to increase the capital gains tax from 20 percent to 28 percent for households with an annual income of $1 million or more and to also tax unrealized capital gains, meaning the IRS would tax property that has increased in value, even before people have sold it.
Forbes reported Harris also wants to raise the corporate rate from 21 percent to 28 percent. The Republican-controlled Congress cut the rate from 35 percent, the highest in the industrialized world at the time, to the current 21 percent, which, when coupled with state corporate tax rates, still places the U.S. a little on the high end.
Harris’s plan would put the U.S. right back up among the highest-taxed countries in the world for businesses, which of course incentivizes them to move overseas to lower tax climates.
Under the House tax plan, the U.S. would have the third-highest corporate rate in the industrialized world, behind only Colombia and Portugal: https://t.co/o7UUMh0P5J pic.twitter.com/JxSG1514zg
— Tax Foundation (@TaxFoundation) September 22, 2021
It doesn’t make sense fiscally either. In 2017, before the Trump tax cuts, the federal corporate tax revenue for the U.S. was $297 billion.
Last year, it was $420 billion, so the tax cuts worked as advertised, generating more economic growth and thereby more tax revenue.
In fact, the total federal revenue was $4.44 trillion last year, up from $3.33 trillion in 2017.
Kennedy explained this phenomenon in his speech to the Economic Club of New York in December 1962, saying, “In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”
In a televised address to the nation in August of that year, JFK argued why the U.S. needed across-the-board tax cuts on individuals and corporations.
“Every dollar released from taxation that is spent or invested will help create a new job and a new salary,” he said. “And these new jobs and new salaries can create other jobs and other salaries and more customers and more growth for an expanding American economy.”
And, it should be noted, more people and businesses paying more taxes.
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Kennedy’s prediction about the efficacy of tax cuts proved true. After his plan was adopted in 1964, tax revenues to the federal treasury increased by over 60 percent by the end of the decade, unemployment fell to under 5 percent and the nation enjoyed a budget surplus by the end of the 1960s.
Ronald Reagan saw the same type of results in the 1980s, as did Trump in his first term.
Harris basically wants to keep the country going on the same path it has under Biden and allow key provisions of the Trump tax cuts to expire.
Past experience under JFK, Reagan and Trump makes clear, that would be a mistake.
