Can We Repeat JFK’s Magic Tax Formula? | Larry Kudlow | Big Think

The so-called liberal argument, which is probably more liberal today than it has been in many, many decades, they argue that we should have equality.

Everybody should be equal. We should all make the same amount of money. We should all have the same assets and wealth. I don't believe that. I think that's fundamentally inimical to free market capitalism. I think that's a kind of Soviet East Europe old communist socialist model that has never worked.

You can't make everybody equal. They tried to redistribute income and wealth rather than increase it. My credo here is instead of making the economic pie smaller and handing smaller pieces to everyone, let's make the pie bigger and get everybody a larger piece.

And I think history has proven, really since the fall of Soviet communism, that that model of income leveling is a bad model. It's a model that doesn't work. It took seventy years for the Soviets to fall but they fell.

And China, for example, the other big communist country, I won't say that they have fallen but they've changed their economy. It's now much more of a market oriented economy.

In my judgment markets distribute goods. Markets set prices. And if there are free opportunities inside markets, that's how people who work hard will do well. And I think the ethos in America is to work hard. That's always been where we are.

In other words, we all start at the same beginning; the starting line is the same. By law and tradition, we should be prejudice free, color free, gender free, whatever. We all have the same legal starting line, but that doesn't mean we all finish at the finish line at the same and I think that's human nature.

So we talk about this in the book, and in particular, as you asked about tax policy, taxing rich people at high confiscatory rates has never worked in this country. It's outside of our tradition.

It's been tried a couple of times. F.D.R. tried it in the 1930s and it didn't work. The economy was no better in the late '30s than it was when he took over in 1932. The war spending did help, but the great new deal experiment failed.

The great times of prosperity in this country is when we lower tax rates and we shrink government; we put government in a lesser position. I'm a believer in the private sector. The government does not run the economy; we run the economy.

So you go back and look at some unbelievable prosperity periods like the post-Civil War period, unbelievable prosperity. The 1920s, unbelievable prosperity. The 1960s, unbelievable. The 1980s and 90s, fantastic economic growth.

Those all have some common characteristics, and usually they include low marginal tax rates so you keep more of what you learn. That's a reward for your work and investment and entrepreneurship.

Less government. Fewer regulations. That doesn't mean no government. It doesn't mean no regulations. I'm for a safety net. But it means at some point you go too far and you're strangling businesses. You're strangling small businesses. That's who I'm really worried about.

So that's my basic argument. John F. Kennedy, to get right to the chase in this book, John F. Kennedy's tax legacy has been lost. It's a very strange story and that's one of the reasons why Brian Domitrovic and I wrote this book.

Kennedy was the first post-World War II supply side tax cutting president. He was the first. Eisenhower wouldn't do it in the 1950s, despite certain urban legends: the 1950s were a lousy economy, three recessions in eight or nine years.

Kennedy knew, having won by a cat's whisker against Nixon, Kennedy knew that he had to grow the American economy at five percent a year. That was his target. Nixon didn't go there.

And Kennedy never really told us in the 1960 election how he was going to grow at five, but he said this is what we're going to do. And then he went back-and-forth with his advisers in 1961 and 1962.

The first step he made was one I disagree with. He allotted government spending, lots and lots of government spending, safety net spending, infrastructure spending, you name it, which his liberal academic advisers suggested to him.