In 1962, President John F. Kennedy told the Economic Club of New York:
"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."
Today's Democrats don't believe that. Instead, in March, the Congress' Democratic leadership passed the largest tax hike in the history of the United States.
The Democratic budget tax plan is not, as Democratic leaders keep saying, a rollback on tax cuts to the rich. The tax hikes they approved attack the budgets of lower- and middle-class Americans.
The average tax increase to California taxpayers--you and me--will be $3,331.
Make no mistake: This plan will hurt the economy.
When taxpayers have money to spend, they do. And any economist will tell us that spending drives the American economy. That was the thinking behind the stimulus checks. As the economy grows, there is more wealth to tax. Hence, tax revenues increase on lower tax rates.
In addition, history has shown that cutting the capital gains rate always stimulates the economy. Those who have capital gains are, by definition, investors. The more money they have to invest, the more the economy expands.
I have voted repeatedly to make the tax cuts of 2001 and 2003--which include the tax cuts to the poor, middle class, elderly, women, families and single mothers--permanent. The American economy works best when uncertainty is lessened. Making the cuts permanent--really permanent--would not only provide a real psychological boost, but, more importantly, it would help working families pay their mortgages and put food on the dinner table.