I pay way too much in taxes and would love a tax cut. However . . .
Letters to Editor
Wall Street Journal
Aug. 10, 2017 6:18 p.m. ET
Reagan's Economic Policies Then vs. Today
Cutting taxes in the manner suggested by Messrs. Gramm and Solon is highly unlikely to bring back 1980s growth rates.
Phil Gramm and Michael Solon present an argument for tax cuts for our economy going forward, but their arguments are less than persuasive. Our economy involves hundreds of components and to select just two for cause and effect is very misleading ("Reagan Cut Taxes, Revenue Boomed," op-ed, Aug. 4)
Citing the tax burden as the cause of the 1980-82 recession ignores the two oil price increases and Paul Volcker's massive interest-rate increases to eliminate inflation. Attributing the economic growth in the late 1980s to Reagan's tax reductions ignores Reagan's $2 billion stimulus (deficit financing) that tripled our national debt. He also subsequently raised taxes. Certainly deregulation had some positive effects on our economy but they also led to the S&L crisis.
Around 47% of Americans don't pay federal income taxes. Therefore, any rate cuts will primarily benefit higher-income earners who don't spend a high percentage of their income which would stimulate the economy.
Due to a multiplicity of factors, economic growth has varied up and down following tax cuts.
Los Gatos, Calif.
Reagan cut taxes, therefore revenue boomed. The rooster crows and therefore the sun rises. The real reason the economy boomed was because millions of baby boomers were coming of age. [and also because women were still entering the workforce]
Daniel S. Smith
Messrs. Gramm and Solon ignore the substantial differences between the economy that Reagan inherited and the one that faces us today. Today the unemployment rate is 4.3%, which by most definitions is close to full employment. Yes, labor-force participation rates are too low, and compensation hasn't advanced for most workers as much as it should have, but this is far from a recession. As a result, the economy doesn't have the room to grow the way it did in the 1980s, when much of the growth that took place was simply a matter of recovery from a double-dip recession. The Fed is certainly in no position to do any dramatic rate cuts. The effective fed-funds rate is now 1.16%. The Fed is raising rates, not cutting them.
Cutting taxes in the manner suggested by Messrs. Gramm and Solon is highly unlikely to bring back 1980s growth rates, and given the likely effects on the size of the federal deficits and debt, it would probably do more harm than good.
Joseph R. Alexander
Each generation must understand that what it wants must be paid for, and not simply passed on to the next generation in the form of an increased national debt. The Reagan tax cuts continued long-term deficit financing as a political expedient to provide what the nation couldn't afford. It is time for Congress to take charge and put the nation on a responsible path to financial stability.
Ken Tomcich, E.A.
Phil Gramm and Michael Solon could have written an article headlined "Clinton Raised Taxes—Revenue and Business Boomed."
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