Throughout the last half-century, time and time again, a means to stimulate an ailing economy has occurred through tax cuts. Former Presidents John F. Kennedy, Ronald Reagan and George W. Bush have proven economic relief is most effective through tax cuts – not government spending.
Still that method has detractors. However, CNBC “The Call” co-anchor Trish Regan, with a panel decidedly against her, made the case for tax cuts. On NBC’s July 11 broadcast of “The Chris Matthews Show,” Regan explained how tax cuts encourage businesses to help reverse the trend of high unemployment and that businessmen are worried about the end of the Bush tax cuts.
“They absolutely are,” Regan said. “They’re concerned about it and this is one of the issues when it comes to hiring. They're hesitant right now when it comes to bringing more employees on board because one, you're not seeing final demand because consumers aren’t spending that much, and number two, they're dealing with the tax consequences of having more people in their companies. So that’s definitely an issue.”
Matthews followed up Regan’s response with a question to Chicago Tribune columnist Clarence Page. He asked would if “Democratic progressives” would be open to the idea of tax cuts, if it meant rescuing the economy and solidifying President Barack Obama’s chances for re-election in 2012.
“Well, only if it hit those at the bottom,” Page said. “You should expand the earned income tax credit or give some kind of a job incentive. But I disagree that he ought to call off, well continue the Bush tax cut. That's not going to win Democrat support.”
However, as the Congressional Budget Office shows, upper-income taxpayers pay more than their fair share of taxes, over six times as much in terms of a percentage of household income overall. And Regan as explained, penalization through taxation is “inherently un-American” because it discourages aspiration.
“Isn’t there something kind of inherently un-American about the more money you make, the more money we’re going to take from you?” Regan said. “I mean, even if you’re not making $250,000 a year as a couple, you may aspire to make that. The government’s going to take more.”
Probably at this point, Matthews may have been wondering how someone with these views wound up booked on his shows. Regan’s remarks drew laughter and protest from “The Chris Matthews Show” panel. Nonetheless, Time magazine’s Joe Klein offered up his pro-taxation view – suggesting all conservatives want to abolish the income tax, which he deemed as “radical.”
“It’s called the progressive income tax for a reason,” Klein said. “Now conservatives want to abolish the income tax. That is so radical.”
But Regan fought back, explaining taxation discourages productivity which is essential to economic growth.
“What I’m saying is, you don’t want to necessarily discourage productivity,” she said. “You want the country to grow and there are ways to do that through tax cuts whether it be through individuals or to businesses.”
Klein attempted to use former President Bill Clinton’s 1993 tax hike as evidence higher taxes don’t necessarily discourage economic growth. And although there is significant evidence to dispute Klein’s point, Regan explained the economy was in a different place then as it is now.
“He did it at a time when the economy was growing,” she said. “We’re in a very different situation right now.”
Take away: Good thing Regan is anchoring a CNBC show and Klein is writing a column for a magazine with a dwindling circulation.