US Senator Mike Rounds’ Weekly Column: Tax Cuts Work for South Dakotans

Tax Cuts Work for South Dakotans
By Senator Mike Rounds (R-S.D.)

 

We don’t have a taxing problem in America – we have a spending problem.

First of all, the government doesn’t generate money, it is not a person or a business.  In South Dakota, if we don’t produce or earn money, whether in our home or business, we don’t spend money. The federal economic projection methods that Congressional appropriations are based upon are flawed.  Therefore, it shouldn’t be a surprise that the national debt has soared.  We need to focus on tax cuts and let people keep more of their own money instead of feeding citizens’ money into a government appropriations system that hasn’t worked in 42 years. Allowing American families to keep more of their hard-earned dollars so that they can spend, save or invest it as they see fit will result in a more prosperous American economy.

I recently introduced a proposal that would keep the ‘tax reform’ discussion very simple. Rather than dive into the 74,000 page tax code – while needed – I offered legislation that simply reduces the average South Dakota family’s tax burden by 16 percent. This is accomplished by a straight and simple 2 point rate cut in each tax bracket. For those on the lower end of the wage scale, that’s even higher – a 20 percent tax cut. That is money directly in your pocket, money that I believe will be used to create jobs, put your kids in college, save for retirement, purchase a car or buy a new home.

Throughout our history, when government regulations and taxes have been moderated – economic freedom and prosperity thrive. There is a direct correlation between government policies and the economy. In recent history, both President John F. Kennedy, a Democrat, and President Ronald Reagan, a Republican, governed during very turbulent economic times. Both were forced to make bold decisions and resist the federal government’s norm. Both pursued a bold, new path.

President Kennedy inherited a stagnant U.S. economy. Initially, trying to stimulate the weak economy, Kennedy proposed a government spending plan that failed. Desperately needing a new solution, Kennedy eventually pushed a plan to slash income tax rates across the board, with the top marginal tax rate declining by 20 points. President Kennedy, through tax cuts, doubled the rate of economic growth that he inherited. And, even with the lower tax rates, more revenue was generated in 1964 and 1965. The tax cuts President Kennedy initiated were followed by four consecutive administrations that raised taxes and, as a consequence, the economy floundered.

Two decades later, President Reagan, a Republican, often gave credit to President Kennedy for cutting taxes. The tax cuts that President Reagan proposed passed both Houses of Congress by wide margins and launched the country into a long stretch of economic growth. Both of these men were bold leaders who defied the “Washington knows best” mentality that has plagued our country for far too long. They both pursued plans that stimulated the economy by letting individual citizens decide how to spend more of their own money.

Lowering the tax rate is but one step we can take to overhaul the tax code that will provide direct, immediate relief to hardworking families and jolt our economy. Cutting taxes, coupled with reducing regulations, will allow our economy to heal from eight years of stagnant growth and once again prosper and flourish. Two revered presidents, a Democrat and a Republican, have already proven that it works.

In the coming weeks, I’d like to share more about my concerns regarding the flawed appropriations process that Congress has been using for the past 42 years.

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