Cal Thomas

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Those wild and crazy (Democrat) tax-cutters

(JWR) ---- (http://www.jewishworldreview.com)
SOMETHING REMARKABLE HAPPENED in Washington, D.C., last week. Democrats came out in favor of substantial tax cuts in order to stimulate business activity and encourage economic growth.

Unfortunately, the proposal is only for the city of Washington, whose taxes are among the highest in the nation and whose government wasted astronomical amounts of money in malfeasance and misfeasance during former Mayor Marion Barry's reign.

Rep. Jim Moran of Virginia, the ranking Democrat on the House panel that oversees the city's finances, has joined the panel's chairman, Rep. Ernest Istook (R-Okla.), in proposing a $419-million tax reduction over three years to create conditions necessary for the city to grow and compete with Maryland and Virginia for business and jobs. Washington's Tax rates are substantially higher than in those states.

The proposed cut is supported by the Democrat majority on the city council and also enjoys rare bipartisan favor on Capitol Hill.

The new mayor, Anthony Williams, and financial control board chairman Alice Rivlin are reacting in classic Democrat fashion. They are responding to the prospect of giving up some of the people's money the way a committed chain-smoker views the prospect of reducing his nicotine intake. Looking at a projected $200 million surplus this year and recorded surpluses in excess of $500 million over the past two years, Mayor Williams said of the proposed tax cuts, "You can't spend what you haven't got.'' That never stopped Democrats before as they ran up record deficits by overspending on worthless programs.

Williams

D.C.'s top income tax rate for businesses is now 9.5 percent. Under the proposal it would be reduced to 6.5 percent over the next three years, aligning it with tax rates in Maryland and Virginia and, it is hoped, stopping business flight to the suburbs and generating more revenue for city coffers. The top tax rate for individual residents who make between $10,000 and $20,000 per year would be cut from 8 to 5 percent. But why stop there? The people who make the most money pay the greatest percentage in taxes. Cutting the tax burden of "the rich'' would draw new residents to D.C., stimulate growth and generate more tax dollars for the city.

In case no one has noticed, what Democrats now favor for businesses and lower income residents is the "supply-side economics,'' or "Reaganomics'' they once denounced. For the city of Washington, if not for the nation, Democrats are now promoting the very "bad medicine'' they used to reject. It appears to be dawning on them that when rates go down, businesses prosper, profits increase and so do tax revenues.

The District's commercial property tax rates would also be simplified under the proposal and reduced by about 14 percent. The city's tax on residential property would similarly be cut by 37 percent. This is beginning to edge closer to the Hong Kong model. If it is approved it has the potential to produce a boom in a town that has long needed a boost in its economy and self-confidence.

When former Housing and Urban Development Secretary Jack Kemp recommended the Hong Kong tax model for D.C., liberal Democrats howled. They said they might be forced to replicate such a plan in other cities if it worked in Washington. The implication was that power would ebb from Washington in the direction of the cities and the people who lived in them. Liberal Democrats, for whom power is everything, wanted no part in that.

Kemp was right when he advocated "supply-side economics,'' and though he will get no credit for his missionary work if tax cuts come to Washington and produce the results he predicted, someone ought bow in his direction. The country's leading "bleeding-heart conservative'' believes that compassion includes letting people keep more of the money they earn so they, not government, can be responsible for spreading it around.

That Democrats are now coming Kemp's way is further proof of what happens to a good idea whose time has come.

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