No New Tax Cuts

AT FIRST BLUSH President Bush’s State of the Union message looked like a winner. Reversing his high-tax 1990 budget, the President’s 1992 State of the Union speech clearly articulated an expansionary fiscal message with a series of across-the-board tax cuts—and a regulatory freeze. Delivered in a serious and firm manner, the President’s speech was clearly aimed at economic recovery.

True enough, some of the tax-cut proposals, especially the temporary reduction of withholding rates, are rather gimmicky. So is the accelerated depreciation investment-tax allowance, which would last only one year, roughly equivalent to a 1 per cent temporary investment tax credit rather than a more sizable permanent reduction in the cost of business capital. And the Administration failed to reduce the cost of labor or make it easier for small-business owners to hire new workers by rolling back the payroll-tax rate or by dropping the 15 per cent-lower- and middle-income tax bracket by a few percentage points.

About the Author

Larry Kudlow

Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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AT FIRST BLUSH President Bush’s State of the Union message looked like a winner. Reversing his high-tax 1990 budget, the President’s 1992 State of the Union speech clearly articulated an expansionary fiscal message with a series of across-the-board tax cuts—and a regulatory freeze. Delivered in a serious and firm manner, the President’s speech was clearly aimed at economic recovery.

True enough, some of the tax-cut proposals, especially the temporary reduction of withholding rates, are rather gimmicky. So is the accelerated depreciation investment-tax allowance, which would last only one year, roughly equivalent to a 1 per cent temporary investment tax credit rather than a more sizable permanent reduction in the cost of business capital. And the Administration failed to reduce the cost of labor or make it easier for small-business owners to hire new workers by rolling back the payroll-tax rate or by dropping the 15 per cent-lower- and middle-income tax bracket by a few percentage points.