Jack Kemp, former quarterback and VP nominee, dies

"When you tax something you get less of it, and when you reward something you get more of it."

Jack Kemp quote.

My world just got a little sadder today. He was one of those politicians that really molded much of my political views. Even today, I'm a firm supply sider and pro-growth through the private sector type of guy. He was the prime influence on Ronald Reagan that was the right economic policy to promote and pursue and the country did come roaring back after Kemp-Roth became the law of the land. So much so that Reagan carried 49 states in his re-election, now that was a big tent and he was one of the primary builders of it. I believe Jack Kemp would like to see the Republican party get back to that again, I know I sure would instead of the borrow and spenders they became under Bush. My condolences to his family, we lost a real good American today.

Baker, the color rising in his face, screamed an epithet at Kemp, Fitzwater recalled. Kemp bounded across the furniture and grabbed at Baker’s throat. They were pulled apart to avoid a fistfight.

Now, now boys...

"When you tax something you get less of it, and when you reward something you get more of it."

One of those overly-simple truisms that, upon a bit of inspection, turns out to have serious flaws. For example, the level of an increased tax on alcohol required to cause an alcoholic to drink less would need to be ludicrously high. Raising the tax only marginally would have no effect. That is because there is still plenty of "reward" aside from the tax.

Likewise the supply-side voodoo that Kemp believed in and which the real world has proven false. The logic goes like this: cut taxes and revenues will increase. Yes, and if you whip a horse it will run faster...for awhile. But only a fool would believe the progression of the logic to its absurd conclusion: That max revenues will come to government when taxes are cut to zero.

I'll bet if Dole and Kemp had won the '96 election, there never would have been a 9/11.

RIP. In a way it's probably good he leaves this world without having to witness and endure the damage that Obama, Reid and Pelosi will do to America.

Kemp paved the way for Reagan:

"Had it not been for the radical 30 percent across-the-board tax rate cut that Kemp sold to candidate Reagan, America never would have realized the prosperity of the Reagan era and beyond. (Looking back, can you imagine a society that had accepted the legitimacy of 70 percent tax rates on our best producers?) By the sheer force of his evangelistic personality, he brought supply-side economic theories to influential journalists and politicians--and also to Ronald Reagan--legitimizing the concept that tax rate cuts were essential to unleash the creativity and innovation of the American dream."

http://weeklystandard.com/Content/Public/Articles/000/000/016/129lbxeq.asp

Likewise the supply-side voodoo that Kemp believed in and which the real world has proven false. The logic goes like this: cut taxes and revenues will increase. Yes, and if you whip a horse it will run faster...for awhile. But only a fool would believe the progression of the logic to its absurd conclusion: That max revenues will come to government when taxes are cut to zero.

Not according to a study conducted by the world monetary fund.

To illustrate the potential effects of tax rate cuts on tax revenues consider the example of Russia. Russia introduced a flat 13 percent personal income tax rate, replacing the three tiered, 12, 20 and 30 percent previous rates (as detailed in Ivanova, Keen and Klemm, 2005). The tax exemptincome was also increased, further decreasing the tax burden. Considering social tax reformsenacted at the same time, tax rates were cut substantially for most taxpayers. However, personal income tax (PIT) revenues have increased significantly: 46 percent in nominal and 26 percent realterms during the next year. Even more interesting PIT revenues have increased from 2.4 percentto 2.9 percent of GDP—a more than 20 percent increase relative to GDP. PIT revenues continuedto increase to 3.3 percent during the next year, representing a further 14% gain relative to GDP.Furthermore, even official estimates showed increased tax compliance.1 This paper shows that endogenous tax compliance responses can be responsible for the massive increase in tax revenues. The key intuition is that tax regimes are prone to spillovers, as the aggregate behavior of taxpayers determines how much time the tax authority can dedicate to the individual taxpayer. In a way, tax evaders protect each other by tying down the tax authority’slimited capacity. Hence, small cuts in the tax rates can lead to much larger changes in the behaviorof taxpayers — most importantly, it can make them much more likely to declare their incomes honestly. These spillovers can lead to increasing tax revenues.

http://www.imf.org/external/pubs/ft/wp/2008/wp0807.pdf

Yabits, think about all the billions that are tucked away in under the table payments, dodgy tax shelters and flat out hidden from the taxman in the American black market. Think if we enacted a flat tax like Russia did how all those billions would all of the sudden be declared as taxable income. Voodoo Economics, nah just good old fashion common sense. Jack Kemp had that in abundance.

First of all, I don't want the valuable discussion on taxation to obscure the sadness I feel on losing Mr. Kemp. I always liked and respected him and never doubted that his heart was in the right place, even when the sentiments didn't always translate into sound policies.

I think Jack is smiling down at the fact that folks like us want to discuss what was so passionately important to him and to the country.

I've always a gut-level respect for towns on the ropes, like Buffalo. And its football team.

sailwind:

Folks will have to explain how the US economy grew so dramatically after WWII with the highest marginal tax rate in the 90% range. Or, in more recent history, how the tax increases enacted by Clinton and the Democratic Congress in 1993, led to one of the largest, most-consistent periods of economic growth in our history -- making 100% the predictions of those like Kemp, who said that the increases would drive us back into the recession that hit us in the early 1990s.

I do not believe there is a single magic bullet with regards to taxes, flat or otherwise. Wanting something to be true does not make it so.

Yabits,

Context once again you have to view the whole thing in context and not cherry pick the facts to suit your point.

Folks will have to explain how the US economy grew so dramatically after WWII with the highest marginal tax rate in the 90% range.

The U.S was the only economy whose manufacturing capacity wasn't totally destroyed during that awful war. We had a ready made world market that needed all the things we could possibly produce after that to get them back on their feet. We rebuilt the worlds economy then, it's not rocket science as to why it grew so dramatically then.

Or, in more recent history, how the tax increases enacted by Clinton and the Democratic Congress in 1993, led to one of the largest, most-consistent periods of economic growth in our history.

Not quite true. The case can be made quite effectively that the tax increases would have dragged down the economy in the long run if there were no corresponding spending cuts to balance it out. Guess what happened in 1994? Clinton lost both the House and Senate in the Republican revolution. He had a congress that actually cut and reigned in Governmnet spending. If he didn't have that brake on him I'd wager his tax increases would have turned out a heck of a lot rosy then your trying to make them out to be in my opinion.

I'm offering up my counter in an effort to bring objectivity into the debate by the way and not a slam on your position.

I think Jack Kemp would've like that also in this discussion of him and his legacy.

Republican, conservative, world football hater. Good riddance.

"world football hater"

Explain!

sailwind writes: "Context once again you have to view the whole thing in context and not cherry pick the facts to suit your point."

We are here honoring the legacy of Mr. Kemp -- may he rest in peace. The "bleeding heart" part of him I could well relate to.

The problem with your statement is that no human being can understand the complete context of anything. And so we all draw our lines and end up "cherry-picking facts" to support our positions.

Not wanting to put words in your mouth, we both might agree with the statement that "all things being equal, the lower the tax rate the better." The problem is that, as you have pointed out, not all things are equal. A high tax rate has not and will not -- ipso facto -- hinder a nation from achieving prosperity provided certain conditions are met.

The difference between us is that you believe that working on the tax rate will achieve ultimate fairness. I believe that working on issues of fairness and equality first will ultimately bring about the optimum method of taxation.

RIP Jack Kemp, he was one of those politicians that was very colorful.

Sarge at 10:37 PM JST - 3rd May "world football hater" Explain!

Everyone has an opinion...Some do not women fighting others do not like American football.....

Jack Kemp may have been a republican, but I always liked him. He was always that republican I looked forward if we agreed on something. I had a lot of respect for him. < :-)

Hell when I was a Republican I thought he would have made a good VP....But that was too many whiskey sours ago.........LOL

I toss one back to Jack and the era of greatness he used to rep. But those times are all but gone....They died out with ole blue eyes.....Ole how slowly our time passes us....Those that were are no more and it will be some time before we see them again. Oh well......

Salud to Jack Kemp! Will have to go to Lawson's buy an Asahi can so I can pour him a drink....<BG>