Taming the Democrats’ Leviathan

Is today’s Democratic Party’s tent big enough to accommodate a contingent of tax cutters? Senators Cory Booker and Chris Van Hollen are giving their party’s left wing the fantods by mooting tax cuts for the middle class. A former aide to President Biden and Senator Elizabeth Warren, Bharat Rahamurti, gripes that “it’s hard to make the case” for putting a “middle-class tax cut” at “the very top of the agenda.” JFK would disagree.That’s the point marked by our Larry Kudlow, who muses whether the Democrats, by “rediscovering tax cuts,” are channeling “the ghost of John F. Kennedy.” JFK was the last Democrat in the White House to “usher in supply-side economics,” Mr. Kudlow reports. In 1962, Kennedy proposed “an across-the-board, top-to-bottom cut in personal and corporate income taxes.” He decried how the tax system “exerts too heavy a drag on growth.” At the time, per the Tax Foundation, the top tax income bracket was a practically confiscatory 91 percent for, say, a head of a household earning more than $300,000 a year. Kennedy called for a top rate of 65 percent. The exorbitant tax rates, he lamented, “siphons out of the private economy too large a share of personal and business purchasing power,” and, worse, it “reduces the financial incentives for personal effort, investment, and risk-taking.” In response to critics who fretted over the “cost” of the tax cuts, JFK averred that “a rising tide lifts all boats” and that tax cuts would spark growth. His assassination in 1963 delayed the tax cuts, but in 1964 Congress approved them. By the next year, in a vindication of supply-side economics, the federal deficit was lower. It’s no wonder, then, that Mr. Kudlow is wondering whether, among Democrats today, the ghost of JFK is “suddenly hovering over their shoulder?”It could be a concession to political reality, Mr. Kudlow reports, by “admitting that President Trump was right as he walloped them in 2024” with his agenda of “across-the-board tax cuts, no tax on tips, or overtime, big breaks for seniors” and other like measures. The popularity of these tax cuts offers context for Messrs. Booker’s and Van Hollen’s plans. Their proposals are causing among Democrats what the Wall Street Journal calls “consternation.” Mr. Van Hollen’s idea is to eliminate income taxes for individuals making less than $46,000 a year and couples earning $92,000 or less. Mr. Booker is nursing what he calls a “Keep Your Pay” plan that would double the standard federal income tax deduction to $37,500 for individuals and $75,000 for couples, while boosting the Earned Income Tax Credit and the credit for child care. Yet both solons would raise taxes on higher earners to offset the lost federal revenue.Mr. Booker would boost the top federal income tax brackets to 41 percent and 43 percent from 35 percent and 37 percent. Mr. Van Hollen eyes a surtax of up to 12 percent for high earners. These provisions contravene the spirit of the JFK tax cuts, which sought to leave more money in the wallets of Americans in every income bracket. The Booker-Van Hollen proposals’ stinginess would prove less beneficial to the economy than an across-the-board cut. Nor would Messrs. Booker and Mr. Van Hollen alleviate the burden of payroll taxes for middle-class earners. The Tax Policy Center has found that these levies, which pay for entitlements like Social Security and Medicare, cost the middle class “three times as much” as federal income taxes. It’s nice to see some Democrats joining the tax-cutting cause, but a comprehensive reduction in Uncle Sam’s levies would require taming the federal leviathan.

Taming the Democrats’ Leviathan

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