Mindconnection eNL, 2005-07-10

We need to look no further than the "theory" of supply-side economics, first made famous by economist Dr. Laffer (from whose name we have derived "The Laffer Curve") and later made even more famous by Nobel Prize in Economics winner Milton Friedman.

This "theory" postulates that  tax cuts ultimately boost economic activity and lead to more tax revenue, not less.

Undergirding this "theory" is the fact that a capitalist economy runs on capital. Remove capital, and the economy slows. Add capital to the economy, and it gets stronger. This idea is based on the observation that if you add fuel to a fire, it gets hotter. If you remove fuel from the fire, it gets weaker. This is the basic concept that allows gasoline engines and jet turbines to work, and that allows firemen to put out forest fires by trenching and pre-burning. So, it's valid.

John F. Kennedy was the first to take the supply-side plunge. He slashed Eisenhower's tax rates and the economy rebounded with a vigor never seen before.

Tax rates went up in subsequent administrations. Then, Ronald Reagan proposed cutting taxes to increase federal revenues. This was allegedly a "new" and "radical" idea, though it had been proven just twenty years earlier!

Liberals said Reagan was nuts. (I can't find similar remarks about Kennedy, who did the very same thing. Hmm.)

Reagan slashed the highest personal income tax rate to 28 percent from a confiscatory 70 percent. Liberals said this was "reckless tax policy." (Does that sound like something you've heard lately? Hmm.)

But, what happened as a result of these tax cuts?

We got an economic boom that took Bill Clinton 7 years to reverse via tax increases. Reagan's tax cuts resulted in doubling federal tax receipts.

Along comes Bush 43. And he starts making "reckless tax cuts." In 2003, President Bush cut taxes on dividends to 15 percent from 39.6 percent, and on capital gains to 15 percent from 20 percent.

What did these "reckless tax cuts" do?

Federal tax revenues have surged by 15.4 percent in the first eight months of fiscal 2005 over the same period last year. Federal, state, and city deficits are shrinking, and some states are running budget surpluses.

Thanks to Nancy Pelosi, who is more concerned about political gamesmanship and control than about doing anything for the taxpayers of this country, many Democrats who would otherwise go along with these great results have been strongarmed into working against economic prosperity.

The official party line is "We can't afford" to make the Bush' tax cuts permanent.

But reality dictates the opposite conclusion: "We can't afford not to make the tax cuts permanent."

• If you vote Democratic, let your candidates know you support economic prosperity through tax cuts.
• If you vote Republican, let your candidates know you oppose "balanced budget" policies that use tax increases rather than responsible spending cuts to achieve their goals.

Regardless of your party affiliation, remember that the largest cost to the economy (and jobs) is not the tax rates themselves, but the compliance costs. We don't need a vicious American Taliban administering a federal tax system that merely duplicates state and local taxation efforts.

The single largest cost to the average citizen is taxation. The single largest drag on the economy is the taxation administration system. We can vastly improve, on both counts, and all be better off for it. Taking action on that front is the single best thing you can do for your financial well-being.

But on 04JUL, it did.

A man broke a window and entered a home at night. He ate large quantities of food in the kitchen, then proceeded to the bedroom. Holding a knife, he threatened the bed occupants and announced he was robbing them. Bad mistake.

The robber did manage to escape, and so far has not been caught. But he definitely got hurt while trying to conduct the robbery. And now we all have a description and police sketch of him. Guns are loaded, and eyes are peeled. I have a feeling he won't survive the next robbery attempt in this neighborhood.

When I was little, I was really little. When I started high school, I was 5'4" and weighed 88 lbs. Growing up like that, I learned that you never just give up without a fight. I have heard so many "experts" advise just to go along with the criminal. I never have. Always resist. If criminals knew they would always be resisted, and possibly killed, what would be their attitude toward crime?

We can turn to real facts and figures to answer that. In Florida, violent crime dropped by 90% during the first year the right to carry law was passed. That is, for every 100 violent crimes that were committed before citizens started packing, only 10 are committed now.

Does that mean a gun will protect you? No. Guns don't kill people--people kill people. And guns don't protect people--people protect people. Yes, learn how to use firearms and be willing to use them if you must. But don't think that is enough. Take common-sense steps to avoid problems, to begin with. I could make a list here, but if you make your own list you are more likely to take those steps. So, start thinking of the ways you can avoid being a crime target. Many of those are detailed in Past issues.