Personal Freedom and Prosperity 103: Private Property
“….private property, production, and voluntary exchange … are the ultimate sources of human civilization.” – Hans-Hermann Hoppe
Utilizing possessions greatly advances a person’s opportunity to invest their time, intellect, labor and money. These investments, coupled with limitless and competitive exchanges of ideas and products, propel commerce, science, art and charity. Then, civilization advances.
Cut Taxes – Free Everyone to Maximize their Time and Talent
Stephen Moore of the WSJ explains how a lower tax rate will produce more revenue and economic growth. At one time, President Kennedy reasoned that private investment would create beneficial economic growth for everyone. As reported by Moore in the Wall Street Journal:
JFK cut rates by about 30% for every income group. He argued that the lower tax rates would “boost the economy, produce revenues, and achieve a future budget surplus.” He even called lower rates “an investment in the future.”
Thus, the highest rate was reduced from from 91% to 70%, and the economy grew, employment increased and total tax revenues increased. Moore states:
The Kennedy tax cut was enacted in 1964 (after JFK’s assassination), lowering the highest tax rate to 70% from 91%. His prediction that the economy would surge was validated by rapid growth every year from 1965 through 1968. Tax collections grew by 8.6% per year and unemployment fell to 3.4%.
Next, Reagan reduced the top rate from 70% to 50% and then later to 28% and the economy expanded and total tax revenues increased. Yes, Clinton increased tax rates but reduced spending to 18% of GDP. Again, good gains because reducing spending ultimately has the same impact as reducing tax rates. [Visit: How Governement Crowds Out Private Investment and When Governments Cut Spending] Again, Moore states:
It is also true that when Bill Clinton raised tax rates in the 1990s, the economy boomed and the share of taxes paid by the rich increased. But the otherwise depressive effect of higher tax rates was counteracted by the lighter burden of government on the private sector—federal spending declined to 18% of GDP in 2000 from 22% in 1993.
A cut in spending is the economic equivalent of a cut in taxes now or later. Similarly, the Bush tax cuts created economic growth, increased total tax receipts and the rich paid a hirer percentage of taxes.
In 2003, President George W. Bush signed legislation that cut the top income tax rate to 35% from 39.6% and cut taxes on capital gains as well. Federal tax revenues surged by a record $780 billion from 2003-07 when the housing bubble collapsed. Once again, the rich paid more tax not less. The share of taxes paid by the top 1% rose to 41% in 2007 from 35% in 2003. Tax payments by millionaires doubled from 2003 to 2007 because there were more millionaires and their before-tax incomes rose rapidly.
The Austrian economist Hans-Hermann Hoppe is correct: “….private property, production, and voluntary exchange … are the ultimate resources of human civilization.” This is what made America exceptional. Reduced spending and cutting tax rates are essential for property and personal freedom.
The following are excellent videos by Learn Liberty of the Institute for Humane Studies, which touch upon the benefits of reduced spending: