This year marks the 100th anniversary of the federal income tax (February) and the Federal Reserve System (December), both of which today are doing immeasurable harm. And, thankfully, both will be undergoing enormous changes.
Income taxes punish the very things we want more of: productive work, risk-taking and success. We can’t say this enough: A tax on income is the price you pay for working; a tax on profits, the price you pay for success; and a tax on capital gains, the price you pay for taking risks that work out.
In times past when the income tax burden has been eased–that is, rates have been lowered–our economy prospered because people weren’t hindered or punished for engaging in more productive activities. The 1920s, 1960s and 1980s were all marked by fantastic innovation, greater economic growth and a gratifying rise in the standard of living. Even during 2003–08, when the income tax burden was eased, the economy did better (as we’ll discuss, the Federal Reserve undid this prosperity).