Wamp: Tax Cuts Create Strong And Resilient Economy
March 30, 2006

Fueled by pro-growth tax relief enacted by the Congress and President Bush, our economy grew at a healthy 3.5 percent in 2005, and consumer confidence recently rose to its highest level in three years.

Yet some policy makers are calling for a reversal of these policies which would raise taxes and slow growth.

Market confidence is well-founded as the good economic news has continued into the first quarter of 2006. In February alone, the economy created 243,000 new jobs, marking the 30th straight month of job growth. The economy has created nearly 5 million new jobs since August 2003, and the unemployment rate is 4.8 percent - lower than the average of the 1970s, 1980s, and 1990s.

Families are sharing in this economic growth. A record-high of nearly 70 percent of Americans own their own homes, inflation is low and household wealth reached $51.1 trillion in the third quarter of this year, another all-time high. All of this news is even more remarkable when taken in the context of the devastating effects of 9/11 and the cost to our economy of hurricanes Katrina and Rita.

Sadly, these facts do not seem able to dispel hand-wringing opinion pieces penned by "economists" whose prose, instead of being guided by sound economic principles, is more often than not tainted by their disdain for President Bush. In their eyes, tax cuts are the problem, not the solution.

But the numbers belie that notion. The fact is that Republican tax cuts, passed in 2003 with little support from Democrats, have generated increased tax revenues and receipts. When working people are able to keep more of their money, they spend and invest it and more taxes come into the federal coffers, it is as simple as that. Several times in history, tax cuts have created increased revenue. President John Kennedy knew that and President George Bush knows it as well.

Federal revenues for the last fiscal year were at their highest level ever, totaling $2.15 trillion - a 14.6% increase over fiscal year 2004. That is the largest year-over-year increase in more than twenty years. The Treasury took in more than $61.4 billion in revenue December 15, the due date for corporate estimated tax payments for the fourth quarter of this year - a fourth quarter record and a 33 percent increase over last year's payments.

And rather than placing the federal treasury in a hole, as liberal pundits predicted, the tax cuts have produced rapid increases in the level of federal tax receipts. Corporate income taxes are up 30% so far this year and individual income tax payments have climbed by 10.3% through February.

Taking a broader view, from 2004 to 2005, receipts were up more than 14 percent, or $274 billion, and current budget forecasts anticipate a further $132 billion increase in receipts in 2006 - more than 6 percent over the record receipts in 2005.

Surprisingly, some Senators and Representatives want to bring an end this good economy by eliminating these proven job-creating measures. The fastest way to stop this revenue windfall and increase the deficit would be to go along with those who wish to raise the tax rate on capital gains and dividends. Fears of just such a tax hike are already worrying investors and affecting stock-market valuations, thus making businesses wary of expanding or hiring more workers.

Those who believe that tax hikes are the way to increase jobs and pay down the debt are the same crowd who pay lip service to free enterprise and entrepreneurial achievement, but demonstrate with their votes that they really believe in bigger government and less freedom.

While the Congress and the Bush Administration must keep working to curb illegal immigration, push lobbying reforms and secure our healthcare system, our pro-growth economic policies are clearly working for the American people and U.S. productivity.