As briefly mentioned in a post below, people – a lot of them who seemed to be classical liberal stirrers like yours truly – gathered in the sun-lit gardens in front of the US Embassy, Grosvenor Square, to witness the unveiling of a statue of Ronald Reagan. I like this editorial in CityAM by Allister Heath, who signs off with these two paragraphs. His comment about JF Kennedy is very much on point:
“In fact, Reagan wasn’t even that original. The best exposition of how tax cuts can reinvigorate an economy remains Democratic president John F Kennedy’s spectacular 1964 reforms, which reduced the top rate from 94 per cent to 70 per cent (Kennedy was assassinated in 1963, of course, but his tax cuts were agreed prior to his death). Two years later, the federal tax haul was 11 per cent higher than forecast: more people made more money and their taxable efforts more than compensated for the reduced tax rate. Kennedy had been proved spectacularly right when he had argued that “an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”
“In 1981, Reagan reduced the top rate of income tax to 50 per cent. In 1986, he cut it again to 28 per cent. Of course, this benefited the richest disproportionately – but they nevertheless ended up shouldering a greater tax burden and paying for a greater proportion of public spending. The share of tax raised from the best-paid 1 per cent jumped from 19 per cent in 1980 to 25.6 per cent in 1990. The moral: to squeeze more tax out of the rich, lower the top tax thresholds. We learnt that in Britain starting in 1979 – but with top earners now taxed at 52 per cent and millions paying 42 per cent, the lessons have been forgotten again. Britain needs to discover its very own Ronald Reagan, a hopeful, optimistic, pro-individual liberty, pro-growth politician with an uncanny ability to communicate. Any takers?”
Well said. In a spirit of fairness, though, I link to an interview with Reagan’s former budget director, David Stockman, who is a fierce critic of the deficits (he also strikes me as somewhat embittered). I am not sure if his call for tax rises in the absence of any serious spending cuts is going to find any welcoming audience. I also think Stockman is far too dismissive of the fact that because of the Reagan supply-side tax cuts, revenues boomed.
As Heath says, hero-worship is something any genuine liberal should avoid. The list of heroes in public affairs is, as far as I can judge, short. Reagan is one of them.