Share

Opinion

George Allen: Reagan's way to opportunity

|
Opinion,Op-Eds

At his 2013 Inaugural, President Obama was described as the "Democratic Ronald Reagan" by ABC White House correspondent Jonathan Kent.

With his clear vision for freedom around the world, his message of lower taxes and reversing the flow of power to Washington, his optimism and character, and his faith in the goodness of the American people, Reagan defined conservatism for generations and secured his place in history as one of America's most consequential presidents -- a transformational leader both at home and on the world stage.

Will Barack Obama leave a similar imprint?

A look at the first State of the Union addresses following each president's re-election offers some insight. Both Reagan and Obama began their presidencies with an economy deep in recession. Reagan's response was to free the job creators with less burdensome government and lower taxes. The Economic Recovery Tax Act of 1981, signed at the Reagan Ranch, cut rates by 25 percent -- and the result was a turnaround so dramatic that Europeans dubbed it the "American miracle."

By 1984, the U.S. economy was experiencing 6.8 percent real growth, the highest in 50 years. Even so, Reagan recognized that the tax code continued to weigh down America's growth potential. He called for comprehensive reform in his 1985 State of the Union -- and in 1986, he delivered a simpler tax code that dramatically reduced the number of brackets and loopholes, so all taxpayers could be treated more fairly and tax rates could come down further.

The language President Obama used in his 2013 State of the Union seems similar, calling for "comprehensive tax reform that encourages job creation and helps bring down the deficit." But President Obama wields tax reform as a weapon of economic class warfare. When he talks about fairness and closing targeted loopholes, his real goal is higher taxes to fund expanding government.

On this point, Reagan was clear: "One thing tax reform will not be is a tax increase in disguise."

Not so for President Obama. The latest double-talk about encouraging job creation while zealously pushing to raise taxes ignores the fact that tax increases on businesses (whether oil companies or small businesses) will be passed on to consumers and ultimately paid by those who purchase the services and products.

In addition to constituting a pass-through tax increase on the middle class at home, these tax hikes make the United States less attractive for investment. The proper prescription for a growth agenda is to make America a more competitive country. The goal should be closing loopholes not to punish success, but to bring down rates for more American innovation and jobs.

Reagan's tax cuts spurred higher growth by giving the United States the lowest individual and corporate income tax rates of any industrialized country in the world. Over the past two decades, other countries seeking to compete for jobs and investment have responded by lowering their tax rates; unfortunately, ours have remained frozen in time. Today, the corporate taxes on business are higher than those of any other industrialized country.

Why would Washington want the "worst in the world" tax on business? If we had a tax code that was "better than average," combined with our natural gas boom and plentiful supplies of oil and coal, there is no reason America would not truly be a land of unlimited opportunity.

Ronald Reagan in 1985 reported that "this nation is poised for greatness," and his strong leadership and sound policies made America a safer, stronger, and more prosperous and respected nation. The next four years will tell whether Barrack Obama leads a similar America ascendency, or drives our country into reverse.

George Allen is a former governor and U.S. senator from Virginia. He serves as Reagan Ranch Presidential Scholar for the Young America's Foundation.

View article comments Leave a comment