> Clinton versus Cleveland and Coolidge on Taxes
> by Lawrence Reed
>
> In a post-State of the Union speech in Buffalo, New York,
> on January 20, 1999, President William Jefferson Clinton
> was asked why Americans shouldn't get a tax cut since the
> federal budget is in surplus and the share of personal
> income taken by the federal government is at a post-World
> War II high. Is this what he said in response?
>
> When more of the people's sustenance is exacted
> through the form of taxation than is necessary
> to meet the just obligations of government and
> the expense of its economical administration, such
> exaction becomes ruthless extortion and a violation
> of the fundamental principles of a free government.
>
> No, unfortunately, Bill Clinton didn't say that -- but
> how refreshing it would have been if he had! Another
> Democratic president of long ago, Grover Cleveland (who,
> ironically, got his start in politics in Buffalo) said it
> in his second annual message to Congress in December 1886.
> What Bill Clinton did say was this:
>
> "We could give it all back to you and hope you spend
> it right."
>
> He went on to say he wanted to keep the surplus for such
> government programs as Social Security, and he concluded
> by tossing a question back to the audience:
>
> "I want every parent here to look at the young
> people here and ask yourself, 'Do you really want
> to run the risk of squandering this surplus?'"
>
> Bill Clinton is not the only American president who couldn't
> trust the people with their own money. Nor is Grover Cleveland
> the only president among the 41 we've had who wanted the
> people to keep more of what they earned. Clinton's audacious
> remarks harshly contrast with the perspective of another
> chief executive more recent than Cleveland: Calvin Coolidge.
> "Silent Cal" is one of my favorites and a man who would
> undoubtedly spurn Clinton as a mouthpiece for an arrogant,
> statist elite. Let me use this opportunity to share with
> readers what America's 30th president thought about taxes
> and the people who worked hard to pay them.
>
> "I want the people of America to be able to work less
> for the government and more for themselves," declared
> Coolidge in his inaugural address on March 4, 1925.
> "I want them to have the rewards of their own industry.
> That is the chief meaning of freedom. Until we can
> re-establish a condition under which the earnings of
> the people can be kept by the people, we are bound to
> suffer a very distinct curtailment of our liberty."
>
> This flinty, frugal New Englander, who grew up respecting the
> hard-earned property of others, believed that the strength
> of the American nation was not centered in Washington, D.C.
> Once, as governor of Massachusetts, he asserted,
>
> "In a free republic a great government is the product
> of a great people. They will look to themselves rather
> than government for success. The destiny, the greatness
> of America lies around the hearthstone. ... Look well to
> the hearthstone; therein all hope for America lies."
>
> Bill Clinton has raised taxes in many forms, several times,
> and once called taxes "contributions.'' As one wag put it,
> "Clinton never saw a tax he didn't like -- and hike."
>
> Not Calvin Coolidge. As vice president, he strongly supported
> the steep reductions in income tax rates proposed by President
> Warren Harding's treasury secretary, Andrew Mellon. From the
> time he became president after Harding's untimely death in
> August 1923 until he left office in March 1929, Coolidge kept
> Mellon on the job and strengthened his own reputation as a
> committed tax cutter by urging Congress to enact further
> reductions. In the 1920s, the top income-tax rate fell from
> 73 percent to 24 percent. Americans with the lowest incomes
> benefited even more when the rate at the other end fell from
> 4 percent to one-half percent.
>
> Between 1921 and 1929, the economy grew by nearly 60 percent,
> the national debt was reduced by a quarter, and the federal
> budget was consistently in the black. The depression that came
> later resulted not from tax cuts, but from unwise monetary
> policies of the Federal Reserve and destructive interventions
> by Congress, particularly in the years 1930-33.
>
> Moreover, Coolidge understood that people respond positively
> to incentives, and negatively to disincentives. He knew that
> marginal rates of taxation made all the difference in the
> world in terms of economic behavior. In that sense, he was
> an early supply-sider--with an important difference. While
> today's supplysiders support tax cuts as a means to increase
> government revenue, Coolidge wanted to leverage tax cuts into
> major spending reductions. Here's what he told an audience on
> Febmary 12, 1924:
>
> If we had a tax whereby on the first working day the
> government took 5 percent of your wages, on the second
> day 10 percent, on the third day 20 percent, on the
> fourth day 30 percent, on the fifth day 50 percent,
> and on the sixth day 60 percent, how many of you would
> continue to work on the last two days of the week? It
> is the same with capital. Surplus income will go into
> taxexempt securities. It will refuse to take the risk
> incidental to embarking in business. This will raise
> the rate which established businesses will have to pay
> for new capital, and result in a marked increase in the
> cost of living.
>
> Coolidge told a press conference on October 11, 1927, that he
> and others "interested in tax reduction ought to be first of
> all bending their energies to see that no unwise expenditures
> are authorized by the government, and that every possible
> effort is put forth to keep our expenditures down, and pay
> off our debt, so that we can have tax reduction." There was
> no Coolidge counterpart to Clinton's call for tens of billions
> of dollars of additional spending in his State of the Union
> speech last January.
>
> According to Americans for Tax Reform (ATR), the average family
> today pays more in taxes than it spends on food, clothing,
> shelter, and transportation combined. The Census Bureau reports
> that the average household pays $9,445 in federal income taxes
> alone -- twice what it paid just 14 years ago in 1985. The
> federal tax code is made up of four huge volumes that are each
> thicker than the Bible, and the tax code is over seven million
> words long. And ATR reports that if Congress were to adopt the
> fiscal 2000 budget President Clinton proposed in January,
> federal bureaucrats will spend more in one second ($56,000)
> than the average taxpayer earns in a year ($28,000).
>
> Where is Calvin Coolidge when we really need him?!
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