So let me get this right. After every Democrat in the House and Senate who voted against One, Big, Beautiful Bill — and therefore promoted a roughly $5 trillion tax hike — now a couple of presidential wannabees, like Senators Cory Booker and Chris Van Hollen, are surfacing plans that would end most income taxes for middle-class Americans, this according to a Wall Street Journal news story. The two men have somewhat differing plans, but basically, as I understand it, they would be raising the standard deduction and some other credits, so the first $75,000 of income would not be taxable.
So, are the Democrats possibly rediscovering tax cuts? Is the ghost of John F. Kennedy, who was the last Democratic president to lower tax rates and usher in supply-side economics, is the Kennedy ghost suddenly hovering over their shoulder? Are they admitting that President Trump was right as he walloped them in 2024 with across-the-board tax cuts, no tax on tips, or overtime, big breaks for seniors, et cetera.
Now I don’t agree with the specifics of the Democratic plan, we’ll talk about it in a minute. But even the merest hint that Democrats believe lower taxes, at least for some people, are better than higher taxes for everybody, might be a good thing. Just maybe.
Now, what Booker and Van Hollen are doing is basically raising the standard deduction on middle-class earners somewhere around $75,000 to $100,000 a year. I’m oversimplifying, but that’s the gist of it. Now here’s the problem, they want to significantly raise taxes on successful earners, upper end earners.
According to the Journal article, Mr. Van Hollen calls for a surtax that climbs as high as 12 percent above existing taxes, which would drive the top rate to nearly 50 percent, or if you live in New York or California, you’d be taxed in the mid 60s percentile. Mr. Booker would raise the top rates from 35 percent and 37 percent into a new 41 percent and 43 percent brackets.
Confiscatory tax rates like these would squelch work and investment, leading to a depressed economy, higher unemployment, and by the way even larger budget deficits. I don’t care how many people the senators want to shield from income taxes, turning around with punitive tax rates on successful entrepreneurs and wealthy individuals is a nonstarter.
Supply-side economics as Kennedy or Art Laffer would tell you, suggests that when you tax something more you get less of it. Punish success and prosperity, you’ll get less success and prosperity. But if you tax something less, you will encourage work effort and risk taking. And that’s the ticket to prosperity.
As Kennedy said many times, a rising tide will lift all boats. There’s no need to punish some while rewarding others in some kind of bizarre socialist redistribution scheme that has been tried many times before and always failed. But you know what folks? At least there are a couple of Democratic senators who don’t think tax cuts are dirty words. So, is JFK having a comeback?
