As the country marks the 50th anniversary of President Kennedy’s assassination, there are many reflections about the man and his legacy. For those old enough, the emotion of the day will never be forgotten.
When it comes to his economic decisions, it may surprise some to take a look his tax policies. They contrast sharply with the Democratic Party of today, and, in particular, with the tax policies pursued by President Obama.
JFK Cut Taxes to Get Out of a Recession
Like our current President, Kennedy came to office amidst a recession and stubbornly high unemployment. Rather than raise taxes, President Kennedy proposed across-the-board tax cuts, taking the top rate from 91 percent to 70 percent.
According to The Tax Foundation, President Kennedy’s tax cut was larger than the Reagan tax cuts and any single Bush tax cut, compared with national income. While no one would deem a 70 percent top rate desirable, it was a fiscal Camelot compared to the 91 percent top rate in existence when Kennedy took office. It reflected his belief that cutting taxes—not raising taxes—would benefit the economy.
Kennedy said that high taxes were a “deterrent to private initiative” and harmed economic recovery. In a speech to Congress advocating his tax cuts, President Kennedy declared, “Every dollar released from taxation that is spared or invested will help create a new job and a new salary.”
Even with the largest tax rate cut in history, Dr. Daniel Mitchell, then a senior fellow at The Heritage Foundation, noted that “Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).” The strong economic growth that resulted from the pro-growth tax cut helped sustain revenues. Although it’s hard to know what revenues would’ve been without the tax cuts, rates were so high at the time it is possible they had little or no effect on revenue.
President Obama has tried to tax and spend out of the recession. With tax increases totaling more than $3 trillion and full employment still on the wish list, Congress and President Obama should take some cues from JFK.