The Historical Lessons of Lower Tax Rates
Courts, not Legislators run our government, by
decree not votes!
Railroad To The Casinos - A $700 Million Boondoggle
Power Trips: Congressional Staffers Share
the Road, Thanks to taxpayers
Congress, aides enjoying free trips
By UPI Staff
United Press International
June 6, 2006
-- A new study says U.S. lawmakers and their aides took nearly
23,000 privately funded trips during the first half of this
"Power Trips: Congressional
Staffers Share the Road" is the result of a yearlong
investigation by American Public Media reporters, Northwestern
University Medill School graduate students and Center for Public
Integrity staffers who analyzed 25,000 travel documents from
January 2000 to June 2005, filed not only by Congress members
but also by their staffs.
During the five-year period,
congressional travelers took at least 200 trips to Paris, 150 to
Hawaii and 140 to Italy.
Most of the nearly $50 million
spent on trips by private sponsors was enjoyed by congressional
staffers who act as gatekeepers to Congress members whom special
interest groups want to reach, the study said.
Copyright 2006 United Press
International, Inc. All Rights Reserved
The Right Frame of Mind
Perhaps a Better Prayer
By Rev. Mark H. Creech
May 23, 2006
AgapePress) - Thursday, May 11, Senate Chaplain Mike Morris
delivered the following prayer before the guests and members of
the North Carolina Senate:
"This morning we offer thanks, O God, for the
unexpected blessing of a $2 billion surplus in the State
Treasury. We're also grateful for the Senators who
understand such a sum. For the poor in our State, $2
billion is an incomprehensible amount -- a different
monetary language. In their world, a few dollars more
each month means the difference between despair and
hopefulness. So to those of us who know the meaning of
$2 billion, help us also respond to the language of
dollar bills and pocket change."
After the prayer, I turned to a colleague sitting next to me
in the gallery and said: "That prayer was decidedly
progressive." In other words, the suggestion of the prayer was
that North Carolina lawmakers ought to take the surplus and dole
it out in various government programs for the poor.
Unfortunately, we are living in a time when most people would
offer a whole-hearted "Amen" to the chaplain's prayer. Yet the
chaplain is actually espousing a form of economic deviance --
one far from the teaching of Holy Scripture.
There's no doubt that Christianity is deeply concerned for
the poor. But the Scriptures do not authorize the government to
be involved in matters of housing, food, child-care,
health-care, etc. Romans 13:3-5, the definitive text for
understanding the role of government, says government is to bear
the sword against evil doers and protect the innocent. The
apostle Paul clearly delineates this to be the reason people
should pay taxes -- to provide for sufficient military, police,
and court services; to protect the public's right to life,
liberty, and private property. It's neither altruistic nor
compassionate, however, when the government coercively extracts
money from one group and gives it as an act of public charity to
another -- even when it's needed! Such is just another form of
violating the eighth commandment: "Thou shalt not steal."
It's hard to believe that America, which was birthed in part
because of its opposition to unjust taxation, would so passively
accept a tax burden that is considerably squelching its hopes at
opportunity. Taxation that seeks a more equitable distribution
of wealth by seizing the property and possessions of those who
have in the name of those who don't, significantly suppresses a
nation's ability to produce.
Moreover, this approach to economics undermines the strength
of the national character.
Alexis De Tocqueville, the famous French philosopher, once
warned: "America will last until the populace discovers that it
can vote for itself largesse out of the public treasury." For
those who might not know, "largesse" means: "liberally vote
themselves gifts and handouts from public coffers."
Without question, today government has become the opiate of
the people. We look to it to solve all our problems, but in
doing so we preempt the genius of private enterprise, the power
of private charity, and the profound influence of the church.
All of these serve to make us a better people -- to nurture the
nation's spirit -- to serve the public more effectively. When
the public begins to look to the government as a panacea for all
its woes, the end is indolence, vice, and less liberty. Can we
honestly deny this is where public or state charity has taken
No, Senate Chaplain Morris' prayer shouldn't receive an
"Amen," but an "Oh me." It was, whether intentional or not, an
unholy alliance with socialism -- pure and simple. In a sermon
titled, The Bible and Economics, Dr. D. James Kennedy of
Coral Ridge Ministries rightly notes that such "[i]nstead of
drawing people to the church and God who is the provider of
every good and perfect gift, it leads them to a more and more
secularized state and engenders more and more of a disbelieving
populace. Furthermore, it leads to a loss of freedom, to tyranny
as we sell our souls to the government store. More and more
people are willing to sell their birthright for a mess of
pottage or, as somebody said, a pot of socialistic message. They
will end up as a people totally dependent upon the state and
Indeed, perhaps a better prayer before the N.C. Senate during
a time of surplus would have been:
"Our Heavenly Father, forgive us, for we are wise in
our own sight, yet far removed from the true wisdom
found in Your ways. Though we sought to help, we created
hindrances. Though we sought to give, we were actually
stealing. In this chamber, we now scramble and fight
over that which is not our own. Today we humbly
consecrate the $2 billion surplus in the State's
treasury and vow to place it where it actually belongs.
In repentance, we give it back to the people."
I feel relatively certain they won't be asking me to pray
before the N.C. Senate anytime soon.
|There is a distinct pattern throughout
American history: When tax rates are reduced, the
economy’s growth rate improves and living standards
increase. Good tax policy has a number of interesting
side effects. For instance, history tells us that tax
revenues grow and "rich" taxpayers pay more tax when
marginal tax rates are slashed. This means lower income
citizens bear a lower share of the tax burden – a
consequence that should lead class-warfare politicians
to support lower tax rates.
Conversely, periods of
higher tax rates are associated with sub par economic
performance and stagnant tax revenues. In other words,
when politicians attempt to "soak the rich," the rest of
us take a bath. Examining the three major United States
episodes of tax rate reductions can prove useful
1) Lower tax rates do not mean less tax revenue.
The tax cuts of the 1920s
Tax rates were slashed dramatically during the
1920s, dropping from over 70 percent to less than 25
percent. What happened? Personal income tax revenues
increased substantially during the 1920s, despite the
reduction in rates. Revenues rose from $719 million in
1921 to $1164 million in 1928, an increase of more than
According to then-Treasury Secretary Andrew Mellon:
The history of taxation shows that taxes
which are inherently excessive are not paid. The
high rates inevitably put pressure upon the
taxpayer to withdraw his capital from productive
business and invest it in tax-exempt securities
or to find other lawful methods of avoiding the
realization of taxable income. The result is
that the sources of taxation are drying up;
wealth is failing to carry its share of the tax
burden; and capital is being diverted into
channels which yield neither revenue to the
Government nor profit to the people.
The Kennedy tax cuts
President Hoover dramatically increased tax rates in
the 1930s and President Roosevelt compounded the damage
by pushing marginal tax rates to more than 90 percent.
Recognizing that high tax rates were hindering the
economy, President Kennedy proposed across-the-board tax
rate reductions that reduced the top tax rate from more
than 90 percent down to 70 percent. What happened? Tax
revenues climbed from $94 billion in 1961 to $153
billion in 1968, an increase of 62 percent (33 percent
after adjusting for inflation).
According to President John F. Kennedy:
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.
The Reagan tax cuts
Thanks to "bracket creep," the inflation of the
1970s pushed millions of taxpayers into higher tax
brackets even though their inflation-adjusted incomes
were not rising. To help offset this tax increase and
also to improve incentives to work, save, and invest,
President Reagan proposed sweeping tax rate reductions
during the 1980s. What happened? Total tax revenues
climbed by 99.4 percent during the 1980s, and the
results are even more impressive when looking at what
happened to personal income tax revenues. Once the
economy received an unambiguous tax cut in January 1983,
income tax revenues climbed dramatically, increasing by
more than 54 percent by 1989 (28 percent after adjusting
According to then-U.S. Representative Jack Kemp
(R-NY), one of the chief architects of the Reagan tax
At some point, additional taxes so discourage
the activity being taxed, such as working or
investing, that they yield less revenue rather
than more. There are, after all, two rates that
yield the same amount of revenue: high tax rates
on low production, or low rates on high
2) The rich pay more when incentives to hide income
The tax cuts of the 1920s
The share of the tax burden paid by the rich rose
dramatically as tax rates were reduced. The share of the
tax burden borne by the rich (those making $50,000 and
up in those days) climbed from 44.2 percent in 1921 to
78.4 percent in 1928.
The Kennedy tax cuts
Just as happened in the 1920s, the share of the
income tax burden borne by the rich increased following
the tax cuts. Tax collections from those making over
$50,000 per year climbed by 57 percent between 1963 and
1966, while tax collections from those earning below
$50,000 rose 11 percent. As a result, the rich saw their
portion of the income tax burden climb from 11.6 percent
to 15.1 percent.
The Reagan tax cuts
The share of income taxes paid by the top 10 percent
of earners jumped significantly, climbing from 48.0
percent in 1981 to 57.2 percent in 1988. The top 1
percent saw their share of the income tax bill climb
even more dramatically, from 17.6 percent in 1981 to
27.5 percent in 1988.
Harmful Spending & Complexity
Lower tax rates are important, but they are not the
only critical issue. Both the level of government
spending and where that money goes are very important.
And even when looking only at tax policy, tax rates are
just one piece of the puzzle. If certain types of income
are subject to multiple layers of tax, as occurs in the
current system, that problem cannot be solved by low
rates. Similarly, a tax system with needless levels of
complexity will impose heavy costs on the productive
sector of the economy.
This WebMemo is excerpted from the author’s,
Daniel J. Mitchell's, Backgrounder,
The Historical Lessons of Lower Tax Rates, published
July 19, 1996.
(Top of Page)
What happens when courts run schools and prisons and transit
authorities and . . .
Miracles do happen. In Los Angeles last week a state judge
lifted a consent decree issued in 1991 after parents filed a
lawsuit claiming that public schools in poor neighborhoods had
too few experienced teachers. The court has since ordered the
school district to spend an average of $11 million a year on
teacher training in certain schools. And now, almost 15 years
later, the judge has finally declared herself satisfied and
declined to extend the decree for another five years.
Other locales aren't so lucky. Consent decrees are judicial
decrees that enforce agreements between state and local
governments and the parties suing them. But such decrees have
proliferated to the extent that judges are micromanaging many
public institutions in the name of protecting "rights." And
they're costing taxpayers money and infringing on the right to
In New York, a 1974 federal consent decree has mandated
bilingual education in the city's schools for more than 30
years--even though many parents want no part of it. In
Tennessee, a federal consent decree from 1979 prevents the state
from requiring generic, rather than brand-name, drugs for
Medicaid patients despite the fact that this is standard
practice for many private drug plans and other state Medicaid
programs. And in Los Angeles, a 1996 consent decree has forced
the Metropolitan Transit Authority to spend 47% of its budget on
city buses no matter what the MTA deems to be its priorities.
New York Law professors David Schoenbrod and Ross Sandler call
this "democracy by decree," or the process by which
public-policy decisions are taken out of the hands of elected
legislators and left to an unelected judiciary. Their 2002 book
of that name is the inspiration for legislation introduced in
the Senate last month that would limit the use of federal
The legislation's sponsors are Tennessee Republican Lamar
Alexander and Arkansas Democrat Mark Pryor. It's no coincidence
that both Senators were once state officials. "I'm looking at
this as a former Governor," says Mr. Alexander. "The idea is to
try to let those who are elected make policy unencumbered by
courts." Mr. Pryor is a former Arkansas Attorney General.
Similar legislation is pending in the House.
Consent decrees can be a huge burden on state and local
officials. They sometimes last for decades, long after the
officials who agreed to them have left office. Newly elected
officials often find themselves locked in by the decrees, unable
to put in place policies they were elected to implement.
Outgoing officials have been known to sign their names to such
decrees in an effort to force their successors to go along with
policies they oppose.
One part of the Alexander-Pryor solution is term limits--either
four years for a decree, or the expiration of the term of the
highest elected official who signed his name to it. Their
legislation also sensibly shifts the burden of proof for
modifying or ending the decree to plaintiffs from state and
The legislation endorses the view of a unanimous Supreme Court,
which in 2004 called for limiting decrees. It warned in Frew v.
Hawkins that federal consent decrees could encroach on state and
local power. They may "improperly deprive future officials of
their designated and executive powers," the Court said. They may
also lead "to federal court oversight of state programs for long
periods of time even absent an ongoing violation of the law."
There are federal consent decrees in force in all 50 states,
with judges running prisons, schools, welfare agencies,
health-care systems and more--based on the advice of the
advocates who brought the original lawsuits. It's time to turn
those jobs back to the elected lawmakers, and it's good to see
at least someone in this ostensibly conservative Congress show
some modesty about federal authority.
WSJ.com OpinionJournal Tuesday, April 18, 2006
The Casinos - A $700 Million Boondoggle
By Paul M. Weyrich
May 01, 2006
If you thought the "bridge to nowhere" was too expensive,
take a look at the price tag of the "railroad to the casinos."
The anticipated changing of a railroad route may not be a
surefire route to riches for the citizens of Mississippi but it
would be a straight flush for the casinos. Economic
conservatives are critical of this deal; social conservatives
also should be.
Senator Thomas Coburn (R-OK) challenged an appropriation
earmark valued at $700 million sought by the political
establishment of Mississippi - namely, Senators Trent Lott (R),
Thad Cochran (R) and Governor Haley Barbour (R). (Senator
Cochran is Chairman of the Appropriations Committee.) Coburn
takes strong exception to Mississippi politicians' attaching the
earmark to the Iraq/Katrina Emergency Appropriations Bill. His
amendment to derail funding for the rail line and a number of
other projects lost 49-48. Another amendment offered by Senator
Craig Thomas (R-WY) to strip earmarks, including the rail
funding, from the Emergency Appropriations Bill also lost.
Coburn knew his fight was uphill but offers compelling points
that address a larger problem within the institution of Congress
and its appropriations process.
Here's the background on this controversial project and the
challenge that will occur.
The Senate Appropriations Committee this week considered the
Iraq/Katrina Emergency Appropriations Bill. The House had passed
a bill last month. The Senate took up the bill after some $14
billion had been added.
The railroad issue demonstrates just how far off-track the
appropriations process has become. The rail tracks have been
repaired and the railroad is fully operational. That lead Coburn
to charge, "It is ludicrous for the Senate to spend $700 million
to destroy and relocate a rail line that is in perfect working
order, particularly when it recently underwent a $250 million
repair." (Later accounts put the estimate at $300 million.)
Lurking behind the issue is how the appropriation is handled
and where the relocation would lead. Supporters say moving the
tracks would allow a new highway to be built and protect the
rail line from future storms. Coburn counters, "Emergency
supplemental bills are designed to help our nation confront
emergencies. While the current location of this rail line may be
displeasing to local economic developers and politicians, it is
hardly a national emergency."
ABC NEWS reporter John Cochran has reported that the movement
of the rail tracks was an item high on the agenda of local
developers. One businessman, identified as representing the Isle
of Capri Casino, told ABC NEWS that he believed economics took a
backseat to safety but moving the tracks "would probably help
development and give us a good east-west connector that is
safe." If that is the case, then why not wait and let Senators
Cochran and Lott advance this proposal through the regular
Many opponents of the appropriation contend the earmark
clearly is intended to help assist the casino industry and cite
a report issued by the Mississippi Governor's Commission on
Recovery, Rebuilding and Renewal, which notes the redesign can
help the "evolving" activities for the Port of Gulfport which
include "a mix of commercial businesses and gaming."
The Christian Science Monitor has called the plan an
attempt to establish "a Las Vegas South." The New York Times
reported last December that the casinos to replace those
destroyed by the hurricane are to be sited on land, not on
barges as they had been located before.
Architect Andres Duany, a leader in the New Urbanism movement
who advocates mixed development, had recommended interspersing
casinos with stores and restaurants. The casino owners balked at
Duany's proposal because as Bernie Burkholder, President and CEO
of Treasure Bay Casinos, explained, "A casino owner wants people
to stay on the property." In short, Mr. Burkholder wants them
gambling, risking their personal financial security and that of
Social conservative leaders and organizations unfortunately
were silent on the issue, leaving the protests to The Nation
and The New Republic. Several economic conservative
groups made public their opposition to the amendment just before
Coburn offered the amendment. Will social conservative groups
come forward and urge the Congressional leadership to strip the
rail line funding out in conference? It is a bad earmark and not
only from the standpoint of the Federal budget and its abuse of
the emergency supplemental appropriations process. It is bad for
Mississippi's citizens. True development of Mississippi's
economy would be fostered by attracting industries with a
future. Gambling may have a future in Mississippi but what does
it have to offer the State's citizens? Many will have a bleaker
future. Here's what the American Family Association of
Mississippi says about the corrosive impact of the Mississippi
"According to a study published in our own state by the
University of Southern Mississippi in 2000 (found under the
resources section), an estimated 5% of our population in 1996
were "problem" gamblers and an estimated 2% of our population
have a "probable pathological" problem with gambling. Given the
population of a census estimate for 2001 at 2,858,029 people in
MS, that's 142,901 people and 57,161 people, respectively. Every
gambler with a problem costs society varying estimates in money
on a yearly basis. One study places just the pathological
gambling costs at $13,586 per pathological gambler. Looking at
just the estimated 57,161 people with a "probable pathological"
problem, the costs to society are $776,575,760 per year.
Gambling costs us all and not just in the counties in which it
is legal. In no matter which area of our state you live, you can
read about case after case of embezzlement that didn't used to
be such a high rate."
Congress is gambling with our future and those of coming
generations by its unwillingness to trim spending. The earmark
for the proposed rail line sitting stuffed in the Iraq/Katrina
Emergency Supplemental Spending Bill illustrates Congress'
unwillingness to trim Federal spending. Blame falls on members
of both parties but it is distressing that key Senators of the
party which claims to support less spending and real government
reform are lending this massive spending effort support.
Parochial special interests are placed ahead of the national
interest. Is it any wonder one ranking lobbyist recently told
The Washington Post that lobbying would remain an industry
in demand in Washington because "We still have a pretty big
government and it has a pretty long reach?"
Fortunately, the White House issued a Statement of
Administration Policy just before the vote which emphasizes the
need to fund operations in Iraq and to overcome Katrina but
declares "the Administration is seriously concerned with the
overall funding level and the numerous unrequested items in the
Senate bill that are unrelated to the war or emergency hurricane
relief needs. The final version of the legislation must remain
focused on addressing urgent national priorities while
maintaining fiscal discipline." The next sentence declares
President Bush's willingness to veto the bill if it remains
stuffed with items such as the rail line earmark. (Majority
Leader William Frist, M.D. (R-TN) believes he has the necessary
votes to sustain such a veto.)
A rebuilt, revivified casino industry may spur employment in
Mississippi -- and if the State's citizens want it, fine - but
it should not receive Federal funds and Mississippi citizens
should ask themselves what toll casinos take on the State's
moral climate and the work ethic. The odds may be stacked
against Mississippi's gamblers' hitting the jackpot; maybe the
safer bet is to become K Street lobbyists pushing earmarks.
Senator Coburn was right and courageous to challenge this
earmark. He should continue his fight for fiscal responsibility.
President Bush is right to threaten the veto. Let us hope that
the President decides to wield his veto stick often to rein in
Congress' lack of fiscal restraint.
Paul M. Weyrich is Chairman and CEO of the Free Congress
(Top of Page)