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Why America Needs a Tax Cut


            
             Americans are subjected to layers of taxation, which play a direct part in restraining our economy. Once congress passes a larger tax cut plan the president is willing to sign, government will benefit as the economy is fueled.
             Our current tax system is taking too much money from the very people who make our economy strong. More importantly the tax system imposes a steep penalty on growth factors such as saving and investing. (Mitchell) To stimulate the economy Washington needs to take a "Free Market" approach to the federal budget. Daniel Mitchell, in the book Why America Needs a Tax Cut states, "The keys to economic growth, at least in terms of fiscal policy, are the size of government and the structure of the tax system" So aggregate government spending, whether it's from taxes or borrowing, slows the economy by taking resources from the private sector who have a stake in spending their resources wisely and giving to politicians and bureaucrats who focus on political incentives. The appropriate approach for policymakers is to review government programs and determine whether they will offset the loss of money to the private sector. For example "A certain level of transportation spending will facilitate economic growth by permitting the efficient flow of goods and services." Why America Needs a Tax Cut p 6.
             Conservatives believe that lowering tax rates will spur economic growth, while liberals believe that reductions if enacted, will help the rich disproportionately while widening the deficit (Mitchell). However, there is a way to judge the desirability of lower tax rates. The United States has had three major episodes of tax rate reductions, the 1920's, 1960's, and 1980's.
             Under presidents Warren Harding and Calvin Coolidge, tax rates were reduced from 73% to 25%. As a result of the changes in tax rates the economy expanded dramatically. Annual economic growth averaged more than 6%, and grew a total of 59% between 1921 and 1929.


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