Speaker of the House John Boehner (R-OH) delivered a speech last night at the Economic Club of New York in Manhattan, laying out the Republican vision when it comes to the debt ceiling, the budget, and taxes. Boehner, of course, denied that increasing revenue has any role in deficit reduction, and to bolster his argument, he pointed to a speech that President Kennedy gave in the 1960′s that called for tax reform:
If we’re serious about balancing the budget and getting our economy back to creating jobs, tax hikes should be off the table…Rather than increase government spending, President Kennedy told the New York Economic Club, we should cut taxes significantly, and take steps to ‘increase incentives and the availability of investment capital’ for employers. I would note that my colleagues and I are not calling for tax cuts in our budget. Rather, we’re calling for an end to the threat of tax hikes — and a fundamental reform of the tax code — to provide certainty to those in our country who create jobs.
This is a favorite reference for Republicans, who attempt to use Kennedy’s calls for tax reform (which resulted in legislation that passed in February, 1964, three months after Kennedy’s death) to bolster their bipartisan credentials and push for further reductions in taxes for the richest Americans. But Boehner and the rest of the GOP conveniently leave out key planks in Kennedy’s plan. Are Republicans saying that they support the following facets of Kennedy’s proposed tax system?:
– The tax reform passed after Kennedy’s death cut the top marginal tax rate from 90 percent to 70 percent, twice today’s top rate of 35 percent. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren’t phased out at the top of the income scale.
– Kennedy called for U.S. corporations to be taxed on all their profits, earned anywhere in the world, rather than the current system of allowing them to defer taxation until they bring those profits home. “The undesirability of continuing deferral is underscored where deferral has served as a shelter for tax escape through the unjustifiable use of tax havens such as Switzerland,” Kennedy said in 1961. During Kennedy’s time in office, corporate taxes made up more than 20 percent of total revenue. Today, it’s less than ten percent.
– Kennedy called for cutting tax preferences for the oil and gas industries, saying in 1963 that, “while these are complex as well as controversial problems, we cannot shrink from a frank appraisal of governmental policies and tax subsidies in this area.” Republicans have been adamantly opposed to cutting subsidies for oil and gas companies.
– Kennedy called for limiting itemized deductions for the rich, saying that they should receive the same benefit for things like charitable giving “as everyone else,” instead of preferential treatment (which they still receive). President Obama has called for the same system since he came into office, but the GOP has derided Obama’s proposals.
Kennedy’s tax reforms also called for boosting the child care deduction and raising the standard exemption, thus providing tax relief for the poorest Americans. “The Revenue Act of 1964 was aimed at the demand, rather than the supply, side of the economy,” said Arthur Okun, a Kennedy economic adviser.
Is Boehner on board with tax reform that fits these parameters? If not, he probably shouldn’t be invoking Kennedy’s name to support his tax cut agenda. The Kennedy family, during the 2010 Congressional campaign, took issue with Republicans using Kennedy’s legacy to support their tax plan, calling the portrayal “dishonest” and “false.”