Why America needs another Jack Kennedy

The nation is $20 trillion in debt. What is the best way to cut the deficit, while funding necessary government programs?

Bernie Sanders wants to raise taxes on the rich and on wealthy corporations. Jack Kennedy espoused cutting personal and corporate income taxes across the board.

                           (Note: This op-ed assumes existing tax rates.)

Assume a corporation has net income of $100,000, and pays taxes at the rate of 25 percent. If you increase it to 30 percent, you will seemingly increase government tax revenues. That's Sanders' idea. In that example, he would leave the corporation with $70,000 after-tax income as opposed to $75,000. But every dollar of net income taken for taxes is $1 less available to the corporation for expansion, hiring employees or paying dividends.

Sanders is demanding the wealthy and large corporations pay their fair share (i.e., more) in taxes. But he would reduce corporate net incomes by increasing the federal minimum wage to $15. He would further reduce net income by requiring employers to provide at least 12 weeks paid family and medical leave, two weeks paid vacation, and seven paid sick days.

Additionally, he promises to invest $1 trillion to put 13 million people back to work. And another $5.5 billion to provide jobs for disadvantaged youth. He would spend unspecified billions, providing Medicare  as a right of citizenship. He'd provide free universal health care, prekindergarten programs and college tuition.

Jack Kennedy, believed lower tax rates would create substantial increases in corporate net  income. The government would take in substantially greater tax revenues because it would be taxing on substantially larger net incomes. Expanding businesses hire more workers who pay income tax. If you hire 40 of the 96 million unemployed, and if they each pay $1,000 in income taxes, that results in increased government revenues, and decreased welfare payments.

President Kennedy, speaking to the Economic Club of New York (Dec. '62), said:

 "There are a number of ways by which the federal government can  [encourage] ... economic growth.

 "The most direct and significant ... is to make possible an increase in private consumption and investment demand.

"The ... best means of strengthening demand among consumers and business, is ... an across-the-board, top-to-bottom cut in personal and corporate income taxes ...

"Our present tax system ... siphons out of the private economy too large a share of personal and business purchasing power ... It  reduces the financial incentives for personal effort, investment, and risk-taking.

"To increase demand -- lift the economy, the federal government's most useful role is not to [increase] in public expenditures, but to expand the incentives and opportunities for private expenditures.

"Consumers are spending between 92 and 94 percent of their after-tax income ...  After-tax income could and should be greater  .... When consumers purchase more goods, plants use more ...  capacity, men are hired instead of laid-off, investment increases, and profits are high."

President Kennedy concluded:

"The lesson of the last decade is that budget deficits are ... caused by ...  slow economic growth and periodic recessions ... (and not by lower tax rates).

"Our practical choice is not between a tax-cut deficit and a   budgetary surplus. It is between two kinds of deficits: a chronic  deficit of inertia, as the unwanted result of inadequate revenues  and a restricted economy, or a temporary deficit of transition,   resulting from a tax cut designed to boost the economy, increase  tax revenues, and [ultimately] achieve ... a budget surplus.

Mr. Sanders blithely promises everything to everybody, seemingly unaware  there is no free lunch, oblivious to the fact that reduced corporate net income" equal reduced federal tax revenues -- the very revenues he needs to play Santa Claus.

Every dollar siphoned off for taxes or  new benefits is one less dollar the corporation can expend on hiring, plant expansion, modernization or dividends. Dollars paid to new employees,  expansion laborers and dividends, all increase income tax revenues.

Moreover, if corporate taxes are raised too high, plants close, workers are laid off, no dividends are paid, there is no net income to tax, and government revenues decline.

It is an undeniable truth that "the power to tax, is the power to destroy." If man earns $1, and the government takes that $1 in taxes, the man has nothing left. So why would the sane man work to earn a second dollar?

Want plant closures and more unemployment? Vote for Bernie. Want a thriving economy, vote for the next Jack Kennedy.

Posted: March 10, 2016. QCOnline.com

Copyright 2016,  John Donald O'Shea

Why This JFK Democrat Won't Vote for President Obama

I have always considered myself a John F. Kennedy Democrat.
I sat glued to the radio when he tried to win the vice presidential nomination. I rooted for him as he debated Richard M. Nixon on TV.
It is because I remain a Kennedy Democrat that I won't vote for President Obama. I can't for three main reasons.
First, I think the president is dead wrong on how to raises revenues and revive the economy. I also believe that Gov. Mitt Romney, who is following JFK's approach, is right. Here is what JFK said. (As you read it, recall Joe Biden's derisive remarks to Paul Ryan: "Now, you're Jack Kennedy").
"There are a number of ways by which the federal government can meet its responsibilities to aid economic growth.
"But the most direct and significant kind of federal action aiding economic growth is to make possible an increase in private consumption and investment demand -- to cut the fetters which hold back private spending.
"It could ... be done by increasing federal expenditures more rapidly than necessary, but such a course would soon demoralize both the government and our economy.
"The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system -- and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.
"In short, to increase demand and lift the economy, the federal government's most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures.
"(A)ny new tax legislation enacted ... should meet the following three tests:
"First, it should reduce the net taxes by a sufficiently early date and a sufficiently large amount to do the job required.
"Second, the new tax bill must increase private consumption, as well as investment... When consumers purchase more goods, plants use more of their capacity, men are hired instead of laid-off, investment increases, and profits are high.
"Corporate tax rates must also be cut to increase incentives and the availability of investment capital.
"For all these reasons, next year's tax bill should reduce personal as well as corporate income taxes: for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital.
"Third, the new tax bill should improve both the equity and the simplicity of our present tax system. This means the enactment of long-needed tax reforms, a broadening of the tax base, and the elimination or modification of many special tax privileges.
"Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget -- just as it will never produce enough jobs or enough profits.
"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. ... This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment.
"The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
"I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: (a) a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or (b) a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve, I believe -- and I believe this can be done -- a budget surplus. The first type of deficit is a sign of waste and weakness; the second reflects an investment in the future." -- JFK, address to the Economic Club, Dec. 12, 1962.
The second reason, I can't vote for President Obama is because he doesn't tell the truth, and sends his surrogates to lie for him. It began with the Rev. Jeremiah Wright and William Ayers and continues with every unemployment report that excludes those who have given up seeking employment, as well as the series of lies about Libya, etc. I no longer have any confidence that anything he tells the American people will be the truth. Mr. Obama is the Democratic equivalent of the Richard M. Nixon.
Finally, I am tired of this president's broken promises to fix important things: Medicare and Social Security. I am tired of class warfare, and of his blaming everybody but himself. And I will not accept as the "new norm" that America grows poorer and weaker, while China gets richer and more powerful with our money.
Jack Kennedy wouldn't, and I won't.
(As a result of the JFK/LBJ tax cuts, unemployment fell from 5.2 percent in 1964 to 3.8 percent in 1966. And taxes paid by individuals rose from about $45 billion in 1964 to $60 billion in 1967.)

Posted Online: :   Nov. 1, 2012 at 2:22 p. m.   - Quad-Cities Online

by John Donald O'Shea

Copyright 2012
John Donald O'Shea