As any historian will tell you, nothing is new under the sun. Past behavior often predicts future outcomes.
And so it is with taxing and spending.
Despite opposition from the bureaucracy to President Trump’s tax cuts, reducing the amount of money government takes from hard-working people cascades through the economy.
When people have more of their own money they go out to dinner, buy a new car or take a vacation, for example. That results in more jobs and investment from businesses across the economy.
Consider the impact of the first three tax cuts enacted by Congress in the 20th Century:
In 1921, President Calvin Coolidge presided over tax cuts including a reduction of the top income tax rates from 73 percent to 24 percent. The nation’s economy took off like a rocket with the economy expanding 59 percent between 1921 and 1929.
President John F. Kennedy successfully cut marginal tax rates including a reduction of the top rate from 91 percent to 70 percent. The economy grew by 42 percent from 1961 to 1965 – an average of 5 percent a year, higher than the 3 percent projected with the current tax plan.
President Ronald Reagan slashed marginal tax rates from a high of 70 percent to 28 percent. As a result, GDP growth average 3.62 percent for each quarter of his Presidency, according to the Bureau of Economic Analysis.
The courageous leadership of Presidents Coolidge, Kennedy and Reagan, and now President Trump, shows that allowing people to maintain more of their own hard-earned money – whether it is business or individuals – not only boosts consumer confidence but helps build a strong economy.
It’s a lesson we need to implement in how we govern the state of Georgia.
Currently, we have a $2.5 billion surplus in the state treasury – extra money public officials taxed the citizens of Georgia that is sitting in the bank. It is the people’s money, not the money of the Georgia Department of Revenue or a past, current or future governor or legislature to spend.
If a store collects more money than is due for a purchase, it refunds you the difference. In our state, officials have collected more than what is due to provide services to Georgia citizens.
You are due a refund. That is why I believe we should follow in the footsteps of our president and Congress – and heed the economic outcomes of history – by cutting taxes in Georgia.
Our current state income tax is 6 percent. The state can obviously do with less if it is running a surplus. I believe we should explore reducing the state income tax by 2 percent – with the amount of surplus triggering the reduction.
Our neighboring states are drawing economic development and new jobs because they have lower rates. Florida has no income tax; Alabama and Mississippi have rates of 5 percent each; North Carolina recently reduced its rate to 5.49 percent. Tennessee’s economy is booming since it recently abolished its state income tax.
For those who live in fear that the state must have a steady stream of growing revenue, I believe it’s time to put Georgia on a diet. We don’t have a revenue problem, obviously, as we have more taxes than we need. Instead, we have a spending problem and a taxing problem.
Our state GOP has been too eager to raise taxes on citizens with everything from a tax on patients in hospitals to a gasoline tax to a hotel-motel tax – all taxes that voters had no ability to cast a vote for or against.
Courageous leaders get this economic concept: when government cuts taxes, it creates a prosperous economy that cascades down to all levels and segments of society and even generates more revenue to public coffers. Let’s hope Congress finishes tax reform before 2017 ends, and our state’s next set of leaders in 2018 and beyond will embrace similar tax cuts so we can bring additional economic prosperity and jobs to all Georgians.
The writer, a former Florida Marlins AAA baseball player and small business owner, represented Forsyth County in the Georgia Legislature. He is a GOP candidate for Lieutenant Governor.