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'Intellectuals' Pining for Higher Tax Rates

The Washington Post's Sebastian Mallaby is on a crusade to discredit pro-growth or supply-side economic policies. Today's column titled "The Return of Voodoo Economics" makes one wonder about what he doesn't like about 4% growth, under 5% unemployment, housing and the stock market higher, wealth being created and tax revenues at all time highs. I guess he pines for the pre-Voodoo Economics days of the 1970's when the highest marginal tax rate was 70% and the country had anemic growth, high unemployment and a Dow languishing below 1,000.

What gives Mallaby the right to think that he is a "serious" person when it comes to economic policy, but President Bush, Vice President Cheney, Majority Leader Frist and Finance Chairmen Grassley are not? Is Mallaby really that arrogant? Did it ever occur to Sebastian that maybe he is letting his ideological views get in the way of an honest appraisal of the facts?

Why is it so hard to explain the concept to many "intellectuals" that the idea is to grow the pie as big as possible, and that taking a smaller percentage of a bigger pie can yield more than a higher percentage of a smaller pie? Mallaby can quote all the economists and studies he wants to justify his attack on the economic wisdom of lower tax rates.

I'll just look at what happens in the real world.

Nations that pursue pro-growth economic policies and expand their economy at 3%-4% a year (or more) create wealth and a better life for their people, and also generate considerably more tax revenue to their governments. Nations that stifle economic growth with policies of high regulation and high taxes, create less wealth and less tax revenues for their governments.

Why has Chile prospered for 25 years, while Argentina languishes? Why are the treasuries of Hong Kong and Singapore flush with revenue? Why have the U.S. and Britain shown tremendous growth since Reagan and Thatcher while Continental Europe with their pseudo-socialism putters along with chronic double-digit unemployment? Go around the world these last 25 years and compare nations with high tax rates to countries with low tax rates, you'll find a pattern.

Growth produces wealth, which leads to higher tax revenues and a more prosperous nation. Less growth produces less wealth and in turn lowers tax revenues. High tax rates retard economic growth; low tax rates encourage more growth. It really isn't that complicated.