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During President Obama’s speech in Cleveland, he indicated that he still wants to raise taxes on small businesses making over $250,000 a year on January 1st. He criticized House Minority Leader John Boehner for wanting to extend tax cuts to the "rich" claiming that these were "not new ideas." He stated:
Make no mistake: he and his party believe we should also give a permanent tax cut to the wealthiest two percent of Americans. With all the other budgetary pressures we have - with all the Republicans' talk about wanting to shrink the deficit - they would have us borrow $700 billion over the next ten years to give a tax cut of about $100,000 to folks who are already millionaires.
It is true that tax cuts are not a new idea. In 1964, Democratic President Kennedy’s tax cuts represented 8.8 percent of the budget—far greater than even the Bush or Reagan tax cuts. While the federal government faced a budget deficit, Kennedy favored “an across-the-board, top-to-bottom cut in personal in corporate income taxes.” Kennedy’s tax cuts reduced the top income tax bracket from 91 percent to 70 percent. In the eight years that Kennedy’s tax cuts were in effect, tax revenue actually doubled. In fact, every time that a President has dramatically lowered taxes, tax revenue has increased. According to Kennedy,
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.
On January 1, 2011, the top income tax bracket will rise from 35 percent to 39.6 percent. If history is any indication, these high taxes will discourage production and lead to a decrease in tax revenue. In the end, the “rich” will end up paying fewer taxes due to Obama’s proposed tax hikes.
Tax cuts are a proven method of decreasing the deficit and expanding job growth. As the video below shows, Obama should take a lesson from one of his Democratic predecessors: